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 History of the Union Pacific railway, by 
 
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ECONOMIC STUDIES 
 
 OF 
 
 THE UNIVERSITY OF CHICAGO 
 
 NUMBER II. 
 
NOW READY 
 
 No. I. 
 THE SCIENCE OF FINANCE 
 
 By GusTAV COHN. Translated from the German by Dr. T. 
 B. Veblen. 8vo. pp. 12 + 800 ; price $3.S0 
 
 IN PRESS 
 
 No. III. 
 THE INDIAN SILVER CURRENCY 
 
 By Karl Ellstaetter. Translated from the German by 
 Professor J. Laurence Laughlin 
 
 No. IV. 
 
 HISTORY OF THE LATIN UNION 
 
 By Henry Parker Willis 
 
HISTORY 
 
 OF THE 
 
 UNION PACIFIC RAILWAY 
 
 BY 
 
 HENRY KIRKE WHITE 
 
 CHICAGO 
 
 1895 
 
Copyrighted by 
 
 THE UNIVERSITY OF CHICAGO 
 
 189s 
 
 "Oc 
 
 V 
 
 Cri]t SSTitbtrsits of Cljtcaso ^rese 
 
CONTENTS. 
 
 Page 
 
 Chapter I. Evolution of the Plan i 
 
 Chapter II. The Chartering Acts 13 
 
 Chapter III. The Building and the Cost of the Union Pacific Railroad 17 
 
 Chapter IV. History of the Branch Roads 38 
 
 Chapter V. Internal History of the Union Pacific 55 
 
 Chapter VI. Public Opinion, Legislation, Litigation 68 
 
 Chapter VII. Financial History of the Union Pacific 85 
 
 Chapter VIII. Proposals for Settlement, Present Status 94 
 
 Appendix I. Acts Chartering the Union Pacific Railway - loi 
 
 Appendix II. Tables 116 
 
 Index 125 
 
CHAPTER I. 
 EVOLUTION OF THE PLAN. 
 
 The first railway to the Pacific claimed the attention of the 
 country on two distinct bases — as an element in our political 
 history, and as a commercial enterprise. In the early sixties the 
 leading argument in favor of building it was the necessity of 
 strengthening in their allegiance to the Union the states on the 
 Pacific coast. Since the completion of the road in 1869 the 
 commercial importance has been the obvious one. 
 
 It was, moreover, the commercial features of the scheme, and 
 only in a minor way the political ones, that inspired the early 
 agitation for a road. In this agitation, which stretches far back 
 of the Civil War, it is interesting to trace the evolution of the 
 plan for connecting the two oceans by rail, and to see how the 
 road was considered at first desirable, then important, and at last 
 necessary. 
 
 The spirit of unrest which led to the discovery of new lands 
 and new routes to old ones during the fifteenth and sixteenth 
 centuries was slow to die out. The commercial spirit of Europe 
 which inspired the quest for a new sea route to India did not 
 subside with the finding of an intervening continent and the sub- 
 sequent failure to find a Northwest Passage. If there was no 
 waterway, a land route was demanded. Explorers had not been 
 slow to trace the great natural waterway leading into the heart 
 of the continent furnished by the Great Lakes, but advances 
 west of Lake Superior were inconsiderable. Thus far the French 
 had led ; here they stopped. 
 
 The completion of the task was reserved for Anglo-Saxon 
 genius. The first attempt to find a way across the continent 
 westward from the lakes was made in 1763 by Captain Jonathan , 
 
2 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 Carver,' of the British provincial army, but this was prompted 
 rather by the spirit of the explorer than by the commercial 
 spirit. During the early years of this century, however, there 
 was a genuine attempt toward opening a road — the Lewis and 
 Clarke expedition.' This was one of President Jefferson's plans, 
 and he drafted with his own hand the instructions for its leaders. 
 
 Roadmaking began a new era when, in 1829, Stephenson 
 made the locomotive a success. The next year saw the introduc- 
 tion of the railway into America, and two years later there was 
 published an article proposing a railway to the Pacific^ The 
 idea spread rapidly, and in 1836 there was held the first public 
 meeting to consider the project.'' From 1842 on, John C. Fre- 
 mont did much valuable work in preparing the public mind for 
 the future Pacific railway by the accounts which he published of 
 his extensive travels in the western country, thus correcting 
 many popular misconceptions concerning that region. 
 
 Asa Whitney was, between 1840 and 1850, the most zealous, 
 efificient, and important advocate of the Pacific railway project. 
 
 ' Probably the first man to make extensive explorations in the Northwest in the 
 interest of England was Carver. He was a native of Connecticut and an oiificer in 
 the French wars until 1763. He spent two years and five months in explorations, but 
 failed to effect what he had planned — an overland trip to the Pacific. In 1767 he 
 was at Prairie du Chien, Wisconsin ; he spent a winter " among the Naudousee of the 
 plains, on the river St. Pierre [probably this was in the present state of Minnesota, 
 on the St. Paul River], 1400 miles west of Michillimackinac ; " in October, 1768, he 
 was back at Boston, after having traveled over 7000 miles, whence he went to England 
 to publish the results of his investigations. His petition to the king did not result in 
 even the repayment of his expenses ; he was defrauded of the proceeds of the sale of 
 his book of travels; and, in 1780, he died destitute, at London, aged 48. See Allen's 
 American Biographical Dictionary. 
 
 » Lewis and Clarke, setting out late in 1803 with 28 men, ascended the Missouri; 
 in 1805 they reached the Columbia and descended to its mouth ; and after spending 
 the winter on the Columbia returned, reaching the Mississippi again in September, 
 1806. Their route coincided roughly with that of the Northern Pacific Railroad. See 
 Chapter iii of Smalley's History of the Northern Pacific Railroad, in which there is 
 reference to a complete account of the journey, prepared from the journals of the 
 leaders. Paul Allen edited it and Jefferson prefixed a memoir. The last American 
 edition was published in New York in 1843. 
 
 a In The Emigrant, of Ann Arbor, Michigan, for February 6, 1832. 
 
 ■• This was called by John Plumbe, a civil engineer, at Dubuque, Iowa. 
 
EVOLUTION OF THE PLAN. 3 
 
 Mr. Whitney was a New York merchant in the China trade who 
 had gained a considerable knowledge of the geography of the 
 West arid also of its needs and its possibilities. By incessant 
 lecturing and writing, and by personal contact with leading men, 
 he made his influence very widely felt, and impressed upon a 
 vast number of people his views of the need and the feasibility 
 of a Pacific railway. He has the honor also of having formu- 
 lated the first definite plan for a road. Although this never 
 received the sanction of Congress it is important as indicating 
 the first stage in the evolution of the Pacific Railway Act. 
 
 Whitney's plan, although it varied somewhat in details at 
 different dates, may be stated as it is found in his third " Memorial 
 to the Senate and House of Representatives of the United States 
 in Congress assembled.'" He here proposed to build a line of 
 railway, beginning at Lake Michigan, westward to the Pacific. 
 He says : 
 
 "Your memorialist Would now represent and explain the 
 plan by which he proposes to carry out this great work. He 
 prays that your honorable body will be pleased to set apart, and 
 sell to him, sixty miles wide of the public lands (and an equiva- 
 lent for any which may have been taken up) from Lake Michigan 
 to the Pacific Ocean, for this especial purpose. He has explored 
 and examined a part of the route ; and from the lake onward, 
 for 800 miles, the land is of the very best quality, but nearly 
 500 miles of this 8oo without timber, and then no timber on to 
 the Rocky mountains. 
 
 " That, after this Boo miles, onward nearly to the ocean, the 
 land is represented as very poor — too poor to sustain settle- 
 ment. Therefore, the whole work is based upon the Boo miles 
 of the first part, with the belief that the facilities which the 
 road would create and give to settlement, intercourse, and com- 
 
 ' The first was presented in 184S, and the result was the introduction, July 31, 1846, 
 by Senator Breeze, of the Committee on Public Lands, of a bill to give effect to 
 "Whitney's ideas. See Congressional Globe, Twenty-ninth Congress, first session, p. 
 1171. The second was presented in 1846. The third is dated Washington, March 
 17, 1848. All three are given as appendices to No. 140 of the Reports of Committees 
 of the House of Representatives, Thirty-first Congress, first session. 
 
4 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 munication with the markets, would render a part of the poor 
 land useful and available. 
 
 "Your memorialist does not ask your honorable body for the 
 appropriation of one dollar in money, or even for a survey of 
 the route. He proposes to make the surveys, commence the 
 work, with machinery, preparations, and arrangements for its 
 continuance, and complete ten miles of road, at his own 
 expense ; and when the ten miles is completed to the satisfac- 
 tion of a commissioner (appointed as your honorable body shall 
 direct), and with his satisfaction that the work will be continued, 
 then your memorialist would receive five miles, or one-half of 
 the lands on the line of the ten miles of road completed, with 
 which to reimburse himself ; the other five miles, or half of the 
 lands, to be held by the government ; and so on for each and 
 every ten miles for the 800 miles of good land, or so far as the 
 one-half of the land set apart will furnish means to complete 
 ten miles of road. Thus the road would be completed for the 
 800 or more miles, and in operation, with one-half (the alternate 
 five miles) settled with towns, villages, and cities, while the 
 other half (or alternates) held by the government would be 
 enhanced in value more than fourfold what all is now worth, 
 and held or sold as the demand for actual settlement may 
 require, but, when sold, to be sold as Congress shall direct, and 
 the proceeds held as a fund to continue and complete the road 
 through the poor lands all to the ocean; and the road and 
 machinery also held by the government as further security that 
 the work will be continued and completed. Beyond the 800 
 miles of good lands, and through the poor lands, when each 
 and every ten miles of road shall have been completed, and the 
 entire ten miles by sixty of lands do not furnish means to reim- 
 burse for the actual outlay, then the fund which may have been 
 accumulated from the reserved half of good lands, or the lands, 
 shall be applied to this purpose ; but, in all cases, the ten miles 
 of road must be completed to the satisfaction of the commis- 
 sioner, before any lands, or money from land sold, can be 
 touched by your memorialist and associates. 
 
EVOLUTION OF THE PLAN. 
 
 "When the road is so far advanced that security can be 
 given to the government that it will be completed, then your 
 memorialist shall pay to the government i6 cents per acre for 
 all the lands set apart of this work ; but the balance, with the 
 fund from the half of the good lands, if any, after the road is 
 completed, shall be held subject to keep the road in repair and 
 operation while it may be considered as an experiment, and until 
 by its earnings it can provide for itself ; then the surplus lands, 
 and funds, if any, with the road and machinery, shall belong to 
 and be the property of your memorialist and his heirs and 
 assigns ; but leaving with Congress, if necessary, the power of 
 prescribing the mode of sale for any lands at public auction to 
 the highest bidder, and leaving with Congress the power of fix- 
 ing and regulating the tolls of said road forever after, sufficient 
 only for repairs, operation, and necessary expenses ; with power 
 also to fix and regulate the transportation of United States mails, 
 troops, and munitions of war, etc., belonging to the government 
 — thus making it a national road, still built and carried on purely 
 as an individual enterprise, without any government, political, or 
 party machinery or influence." ' 
 
 Mr. Whitney went on to estimate the length of the road at 
 2030 miles, for which the grant of land would be nominally 
 77,952,000 acres, but practically about two-fifths of that ^' 
 amount, granting that only the first 800 miles of the road would 
 run through valuable lands. From the sale of these lands Whit- 
 ney believed that he would be able to obtain the sum necessary 
 for the accomplishment of his task, and he estimated the neces- 
 sary expense at ;^6o,6oo,ooo for the completed road.° 
 
 The fanatical nature of the man is evident when Whitney 
 says : "My desire and object have been to carry out and accom- 
 plish this great work for the motives, as here and everywhere 
 else by me declared, to give my country this great thoroughfare 
 for all nations without the cost of one dollar ; to give employment 
 to and make comfortable and happy millions who are now desti- 
 
 ■ Third memorial referred to above, pp. 37 and 38. 
 'Ibid., p. 38. 
 
6 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 tute and starving, and to bring all the world together in free 
 intercourse as one nation. If it is feared that the remuneration 
 will be disproportionate to the extent and importance of the 
 work, then I am ready to relinquish any claim I may have for 
 compensation, and let the people give me anything or nothing, 
 as they please. If they will but allow me to be their instrument 
 to accomplish this great work, it is enough. I ask no more. I 
 am willing to have my acts scanned ; but I feel that I ought not 
 to be doubted when I say that what I have done, and what I 
 propose to do, is not for the gain of wealth, or power, or influ- 
 ence, but for the great good which I am persuaded it must pro- 
 duce to our whole country. I have, undertaken this mighty 
 work, because I know that someone's whole life must be sacrificed 
 to it.'" 
 
 When Whitney presented to Congress his third memorial, his 
 plan had been formally approved by public gatherings and 
 boards of trade in a great number of widely scattered cities, and 
 
 / also by the legislatures of i6 states. The distribution of the 
 approving states shows the total lack at this time of sectional 
 feeling in the treatment of the project. Of the New England 
 states the list contains five — Maine, New Hampshire, Vermont, 
 Rhode Island, and Connecticut; of the middle states three — 
 New York, New Jersey, and Pennsylvania ; of the southern states 
 five — Kentucky, Tennessee, Maryland, Georgia, and Alabama; 
 and of the central states three — Ohio, Michigan, and Indiana.^ 
 As the Union at this time consisted of but thirty states, a major- 
 ity of them had sanctioned the plan. These i6 states, moreover, 
 
 L. contained 65 per cent, of the population of the Union. 
 
 ' Pamphlet issued in 1849. 
 
 'As appendices to Report ^o. 140, referred to in note p. 3, there are given the 
 resolutions passed by 14 of these legislatures. Accompanying the list of states pass- 
 ing such resolutions is this statement : " In most instances, the resolutions of the 
 above state legislatures passed both houses by an unanimous vote, and in all cases by 
 large majorities — more than two-thirds " (p. 21). The states specified are as in the 
 text. In the memorial quoted above Mr. Whitney says that 17 had approved his plan 
 (p. 43). In a letter written at Washington, February 24, 1849, he says 19 have done so. 
 Ihe Democratic Review, vol. xxiii, p. 405, gives the list in the exact order of the 
 Committee's Report, but makes two important insertions — Illinois and Iowa. Includ- 
 
EVOLUTION OF THE PLAN. 7 
 
 Thus accredited Whitney brought his scheme before Con- 
 gress. In the House of Representatives his memorial was referred 
 to the Committee on Roads and Canals, by whom a report was 
 submitted March 13, 1850. This highly commended Whitney's 
 plan and mapped out the arguments in favor of a Pacific railway 
 . as follows : ( i ) It will cement the commercial, social, and polit- 
 ical relations of the East and the West. (2) It will be a high- 
 way over which will pass the commerce of Europe and Asia, to 
 the great advantage of our country.' (3) It will tend to secure 
 the peace of the world. (4) It will transfer to the United States 
 part of the commercial importance now held by Great Britain. 
 
 The committee proceeded to state why they preferred Whit- 
 ney's plan to any of tjie others which were being talked of in 
 an indefinite way. Their reasons were given thus : ( i ) This is 
 a private enterprise, in which the government is in no way 
 entangled. (2) This route has fertile land and timber in greater 
 quantities than any of the more southerly ones. (3) The rivers 
 are more easily bridged at the north. (4) Owing to the dryness 
 of the atmosphere the snow-fall is less than on the other routes. 
 (5) The northern passes are at lower altitudes. (6) Animal 
 and vegetable products which would be ruined by carriage 
 through a warmer region can here be transported without danger. 
 (7) The higher the latitude the shorter the distance to be 
 traversed. (8) This plan creates the means for carrying itself 
 out. (9) No other plan proposes to lower the price of trans- 
 portation to its cost. 
 
 Accompanying this report the committee presented a bill 
 putting into proper legal form Whitney's proposal as given above, 
 except that the price per acre was made 10 cents instead of 
 16 cents. 
 
 ing these in the list Whitney's plan was approved by the legislatures representing 70 
 per cent, of the people of the United States. 
 
 ' There was a great deal of speculation as to the amount of freight passing 
 between Europe and Asia which would take this route, and the belief seems to have 
 been very general that it would be considerable. All these calculations were upset by 
 the opening of the Suez Canal, which occurred about six months after the completion 
 of the railway. 
 
8 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 In the Senate, Bright, of the Committee on Roads and Canals, 
 presented on the I2th of September, 1850, an elaborate report 
 and a bill providing for the grant to Whitney.' Neither of 
 these bills ever came to a vote. 
 
 Even before this time men prominent in the political world 
 had begun to lend prestige to the Pacific railway scheme by their 
 advocacy of it. Calhoun had become interested in it ;" Jefferson 
 Davis, with an eye to the advantages of the South, had spoken 
 strongly in its favor ;3 Stephen A. Douglas showed a marked 
 desire that the project succeed. 
 
 Salmon P. Chase has claimed to be the author of the first meas- 
 ure under which the government did any real work toward securing 
 a road to the Pacific — an appropriation, in 1853, of funds for the 
 exploration of possible routes for the road.* During no session 
 
 ' Congressional Globe, Thirty-first Congress, first session, p. 1809. 
 
 ' See his reports while Secretary of War, and a letter reproduced in Hunt's Maga- 
 zine, vol. xviii, p. S93- 
 
 3 At the time of the Thirtieth Congress he had "declared himself in favor of build- 
 ing a railroad ' from the Mississippi to the western limit of the territorial possessions of 
 the United States, from one sea to another.' ' It is not,' added the future leader of 
 disunion, ' that I have any want of confidence in the attachment of any American 
 citizen to the government of the United States ; for I have an abiding confidence in 
 that attachment. I believe it is not to be broken off, however widely they may be 
 separated from the government.'" — Galaxy, vol. iv. p. 486. 
 
 ■• " It is among my most pleasing recollections of service as a Senator from Ohio, 
 that the first practical measure looking to the construction of a Pacific railroad, which 
 received the. sanction of Congress, was moved by me. That measure was an amend- 
 ment to the army appropriation bill, placing at the disposal of the Secretary of War 
 one hundred and fifty thousand dollars, to be expended in surveys and explorations of 
 routes for the road. It was adopted in the Senate in February, 1853, and was sub- 
 sequently concurred in by the House. Its results are embodied in the volumes known 
 as the Pacific Railroad Reports, printed by order of Congress." 
 
 From a, letter of Mr. Chase's to General John A. Dix, dated Washington, November 
 25, 1863, and reprinted on pages 158 and 159 of J. W. Schuckers's Life of Chase. The 
 Act referred to will be found in 10 Statutes at Large, 219. 
 
 The appropriation of 1853 was not, strictly speaking, the first one made. In the 
 Army Appropriations Act of March 3 1849 (9 Statutes at Large, 372), $50,060 was set 
 
 aside " To defray the expenses of Topographical [ ] of surveys of routes from the 
 
 valley of the Mississippi to the Pacific Ocean." But I find no record of the funds hav- 
 ing been used for this purpose. 
 
 The reports referred to above by Mr. Chase are entitled " Reports of Explorations 
 and Surveys to Ascertain the most practicable and economical Route for a Railroad 
 
EVOLUTION OF THE PLAN. 9 
 
 of Congress since that time has the Pacific railway failed to 
 come up for discussion of some sort. 
 
 A few of the earliest Pacific railway bills which were consid- 
 ered by Congress may claim attention because they foreshadowed 
 future action. On March 31, 1852, the Committee on Post 
 Offices and Post Roads in the Senate introduced a bill to carry 
 out Whitney's project.' 
 
 Early in 1855 there was under consideration in the Senate a 
 bill providing for a single road running from the western boundary 
 of one of the tier of states which have the Mississippi for their 
 eastern boundary, to the eastern line of California. A grant of 
 land and a cash mail contract were to be given to the lowest 
 bidder for the building of such a road, and bids were to be received 
 from individuals, companies, or corporations. 
 
 A substitute for this measure was moved February 15, 1855, 
 by Senator Gwin, of California. This provided for one road to 
 begin at the western boundary of Texas, running to the navigable 
 waters of the Pacific in the state of California, to be called the 
 Southern Pacific ; a second, beginning at the western boundary 
 of Iowa or Missouri and running to San Francisco, the Central 
 Pacific ; and a third, to run from the western boundary of Wis- 
 consin to the navigable waters of the Pacific in Washington or 
 Oregon, the Northern Pacific. Senator Gwin's substitute passed 
 the Senate February 19, 1855, but went no further.^ 
 
 The House of Representatives, December 20, i860, passed a 
 
 from the Mississippi River to the Pacific Ocean made under the direction of the Secre- 
 tary of War, in 1853-4, according to Acts of Congress of March 3, 1853, May 31, 1854, 
 and August S, 1854." The eleven volumes contain a wonderful mass of information 
 of all sorts concerning the trans-Mississippi country, and if they were read they would 
 certainly have proved to those who still doubted it the feasibility of the Pacific rail- 
 way. Possible locations for the road were found at short intervals between the thirty- 
 second and the forty-ninth parallels of latitude, their terminal points ranging from San 
 Diego to Puget Sound on the west, and on the east from Fulton, Arkansas, to St. Paul, 
 Minnesota. The air-line lengths varied from 1360 to 1740 miles, and the ground-line 
 lengths from 1533 to 2290 miles. 
 
 ' Congressional Globe, Thirty-second Congress, first session, p. 941. 
 
 "Notice of its passage by the Senate was received by the House, but it does not 
 subsequently appear on the records. — Congressional Globe, Thirty-third Congress, 
 second session, p. 814. 
 
lO HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 bill providing for a central and a southern road, the expense to 
 the government being estimated at $96,000,000.' It was not 
 long after this, however, that Congress ceased to consider propo- 
 sitions for spending money on internal improvements in the 
 South, and the southern line dropped out of the plan. 
 
 Naturally any project which had so strong a hold on the 
 people of the country as had the Pacific railway would be made 
 / use of as political capital. The Republicans first '^ gave it party 
 recognition in their platform of 1856.3 In i860 the Democrats 
 at the Charleston (S. C.) convention pledged "such constitu- 
 tional government aid as will insure the construction of a rail- 
 road to the Pacific coast at the earliest practicable period."'' 
 The other Democratic convention of that year, held at Baltimore, 
 framed a similar plank, bounding their willingness to aid the scheme 
 by constitutional limits only.s The Republican party at its con- 
 vention of the same year resolved "That a railroad to the Pacific 
 Ocean is imperatively demanded by the interests of the whole 
 country ; that the Federal Government ought to render immediate 
 and efficient aid in its construction ; and that, as a preliminary 
 thereto, a daily overland mail should be promptly established."* 
 In June, 1864, the Republican party again ''Resolved, That we 
 are in favor of a speedy construction of the railroad to the^ 
 Pacific coast." 7 Meanwhile the friends of the road in Congress 
 were far from idle. 
 
 It would be impracticable to detail all the propositions which 
 were presented for the consideration of Congress during the fifties 
 
 ' Congressional Globe, Thirty-sixth Congress, second session, p. 171. 
 
 "The Democratic Convention of 1856 was held at Cincinnati June 2 to 6. McKee, 
 in his Platforms and Parties, p. 55, gives this section : 
 
 " Resolved, That the Democratic party recognizes the great importance, ih a politi- 
 cal and commercial point of view, of a safe and speedy communication, by military 
 and postal roads, through our own territory between the Atlantic and Pacific coasts of 
 this Union, and that it is the duty of the Federal Government to exercise promptly all 
 its constitutional power for the attainment of that object." 
 
 In several other places where I have found the platform no such planii was given. 
 
 3 Stanwood, History of Presidential Elections, p. 207. 
 
 'IHd.,^.2i^. ^ Ibid., -p. 231. 
 
 'Ibid., -p. 22^. ■> Ibid., -p. 2^1. 
 
EVOLUTION OF THE PLAN. I I 
 
 and the early sixties.' Scores of bills were introduced, and many 
 ideas which were not thus put into formal shape appeared in the 
 debates. The Whitney plan called for a grant of all the lands 
 in a strip 6o miles wide. A similar one narrowed the strip to 
 40 miles in width, and gave only the alternate sections.'' 
 The 40 was cut to 30 3 and then the 30 miles was cut to 24 
 miles.-t Still another proposition gave ten alternate sections 
 on each side of the track. ' Finally it was cut down to five 
 alternate sections on each side of the track. ^ Some bills 
 gave arable lands and mineral lands indiscriminately ; one 
 retained all lands containing minerals other than coal or iron, 
 but replaced them with arable lands lying farther from the road.' 
 Another retained all mineral lands, replacing them in the same 
 way. Once it was proposed that the railway might buy mineral 
 lands at the regular price for arable lands. ^ It was proposed 
 that the government organize the workmen on a military basis ;' 
 again that the railway company be empowered to do so.'° At 
 one time a bill passed the House of Representatives providing 
 that the road must be completed within i 5 years, and granting 
 an additional bonus in subsidy bonds of $2,000,000 for each 
 year's reduction from the allotted time." One committee 
 reported a measure providing that the bonds of the road be 
 made salable by paying the first year's interest from the treasury 
 of the United States, and guaranteeing its payment for the suc- 
 
 ' The early congressional history of the Pacific railway has been followed, session 
 by session, in John P. Davis's The Union Pacific Railway (Chicago, 1894). Those 
 who wish a minute account will find it there. 
 
 2 Congressional Globe, Thirty-sixth Congress, first session, p. 2440. 
 
 'i Ibid., Thirty-third Congress, second session, p. 749. 
 
 ' Ibid. >-^' 
 
 5 13 Statutes at Large, 356. 
 
 " 12 Statutes at Large, 489. 
 
 T Congressional Globe, Thirty-sixth Congress, first session, p. 2440. 
 
 ^ Ibid , Thirty-eighth Congress, first session, p. 2328. 
 
 '^ Ibid., Thirty-sixth Congress, first session, p. 2451. 
 
 ^°Ibid., Thirty-seventh Congress, third session, p. 1 180. 
 
 ^'^ Ibid., Thirty-sixth Congress, second session, p. 381. 
 
I 2 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 ceeding 19 years. ^ Unreasonable plans were discussed and laid 
 aside. Reasonable ones were talked to death or amended to 
 death, until it was hard to tell whether the Pacific railway fared 
 worse at the hands of its enemies or of its friends. 
 
 The project had in early years been for one road only, the 
 northern one. Later the local interests of the various sections 
 came into the problem, and multiple road schemes were brought 
 forward. When the outbreak of the war left legislation in the 
 hands of a northern Congress the scattered energies were again 
 concentrated on one road, and that the central one. After much 
 wrangling, a bill was framed which could command enough votes, 
 and passed the House May 6, 1862, by a vote of 79 to 49.^ 
 The Senate passed it with slight changes June 20, 35 to 5,^ the 
 House concurred, June 24, in the Senate amendments by a vote 
 of 104 to 21,'' and July i, 1862, it became a law^ by the signature 
 of President Lincoln, who had long warmly favored the project. 
 
 " Congressional Globe, Thirty-eighth Congress, first session, p. 2329. 
 
 'Ibid., Thirty-seventh Congress, second session, p. 1971. 
 
 ^Ibid., 2840. 
 
 ■• 12 Statutes at Large, 489. 
 
 5 Congressional Globe, Thirty-seventh Congress, second session, p. 2905. 
 
CHAPTER II. 
 THE CHARTER ACTS. 
 
 The Pacific Railway Act of 1862 had for its object the build- 
 ing of a road which should connect the eastern railway net with ' 
 the one which had already begun to come into existence on the 
 Pacific coast. This road was not, however, to begin where the 
 roads from the East then ended. Across Iowa private initiative 
 could be trusted to supply the lack, so the initial point of the 
 Pacific railway was located on the Missouri River, at Omaha. 
 This city had no rail communication with the East until Decem- 
 ber 1867, when the Chicago and Northwestern came through to 
 that point. 
 
 The Pacific Railway Act provided for a road to run from\ 
 Omaha to San Francisco. The eastern portion of this trunk line, ! 
 from Omaha to the state line of California, was to be built by the 
 Union Pacific Railroad Company. This company was to be 
 organized de novo for this purpose, the first corporation since the 
 Second United States Bank to receive its charter from the 
 National Government. 
 
 The western part of the main trunk, from the eastern line of 
 California to San Francisco, was to be built by the Central 
 Pacific Railroad Company, a California corporation. 
 
 Besides this main line, the act provided for other branch lines. 
 Each of the various cities on the Missouri River wanted the 
 valuable privilege of being the eastern terminus of the system, 
 and to quiet these demands a system of branches was devised. 
 Sioux City, on the north, was provided for in this way : When 
 that point had been reached by a railway running through Iowa 
 or Minnesota — i. e., from Chicago br St. Paul — the Union 
 Pacific Company was required to construct a branch connecting 
 
 13 
 
14 
 
 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 Sioux City with the main line at a point not west of the one- 
 hundredth meridian. From Kansas City, the Leavenworth 
 Pawnee and Western was to build an extension to the north and 
 west, joining the main line, like the Sioux City branch, at a point 
 not west of the one hundredth meridian. This company was 
 also authorized to build a short line from Leavenworth to con- 
 nect that city with the Kansas City branch. St. Joseph was to 
 be the initial point of a line by way of Atchison running 
 
 PACIFIC R. R. SYSTEM AS CONTEMPLATED BY THE ACT OF JULY 1ST, 1862. 
 
 
 westward. It was expected that lOO miles of track would 
 sufifice to effect a junction with the Kansas City branch. Thus 
 there would be a symmetrical system of branches to collect the 
 trafific of the Missouri River points and concentrate it at the one 
 hundredth meridian for its trip westward. The Pacific railway 
 as contemplated in the Act of 1862 is shown in the accompany- 
 ing map. 
 
 To insure the building of these roads a government subsidy 
 was offered in the shape of a land grant and a loan of the credit 
 of the United States. This, however, did not apply to the short 
 line from Leavenworth. On each side of the track the railway 
 company was to receive five sections of land, the alternate ones 
 — i. e., one-half the land in a strip 20 miles wide. This would 
 make the total grant of land about 33,000,000 acres. 
 
 But this land grant could not be made a source of immediate 
 income, for sales must wait on settlement, and settlers would 
 come in but slowly until the railway was built. The credit loan 
 
THE CHARTER ACTS. I 5 
 
 was the device for providing ready money. This aid was given 
 in the following manner : when short sections, of specified 
 lengths, had been completed, the Secretary of the Treasury was 
 authorized to turn over to the railway officials bonds of the 
 United States, which could be sold. For those portions of the 
 road which ran through level country — i. e., east of the Rocky 
 Mountains and west of the Sierra Nevadas — there were to be 
 given for every mile of road sijiteen currency bonds of the United 
 States of the denomination of iSiOOO, to run thirty years, with 
 interest at 6 per cent. For the 150 miles where the road, leaving 
 the plains, climbed across the Rockies to reach the interior 
 plateau, the bond subsidy was to be trebled — ;S48,000 per mile. 
 The provision was the same for the i 50 miles eastward from the 
 western base of the Sierra Nevadas. For the plateau region 
 between the Rockies and the Sierra Nevadas the subsidy was to 
 be ^32,000 per mile. Thus the total issue of United States bonds 
 for the purpose of securing the construction of the Pacific rail- 
 way was, in round numbers, 26 1,000, 000. But these bonds were 
 not a gift to the railway companies ; they were a loan, to be repaid 
 at maturity, principal and interest, and they were constituted a 
 first mortgage on the roads which they were issued to aid in 
 building. Such was the offer which Congress, in 1862, saw fit to 
 make for a railway to the Pacific' 
 
 Organization was effected by the Union Pacific Company 
 under this act and some work upon its road was done, but it 
 gradually became evident that the Pacific railway would not be 
 built under the Act of 1862. 
 
 Proposals for its amendment were not uncommon, most of 
 them aiming to secure the advantages of connection with the 
 Pacific railway system for certain localities, as Lawrence, 
 Topeka, etc." 
 
 But at last there was enacted an amendatory act which 
 radically altered the terms of the Act of 1862. This received 
 
 ' A discussion o£ the reasons for this congressional action and some of the views 
 expressed by individual congressmen vifill be given after the construction of the road 
 has been dealt vfith. 
 
 ■^Congressional Globe, Thirty-eighth Congress, first session, pp. 523, 982, 1022. 
 
1 6 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 the President's signature July 2, 1864.' The most important 
 provision related to the privilege of issuing bonds and to the 
 Government's mortgage on the road. The companies received 
 the new privilege of issuing first mortgage bonds equal in 
 amount and of tenor similar to the United States bonds provided 
 for in the Act of 1862. Thus the government gave up its first 
 lien on the roads and accepted a second one in its stead. The 
 land grant was doubled, being made ten alternate sections on 
 each side of the track for every running mile of road. Besides 
 these more important changes, which doubled the resources of 
 the^companies, several minor ones helped to put them on a more 
 favorable footing.' 
 
 ' 13 Statutes at Large, 356. 
 
 sA more detailed discussion of the Acts of 1862 and 1864 does not seem neces- 
 sary at this point. Individual features of them, which have here been omitted, will be 
 mentioned from time to time as the narrative requires, and the entire acts are reprinted, 
 in abstract or by citations, in the Appendix, pages loi to 115, for the benefit of those 
 who wish to know their terms more minutely. 
 
CHAPTER III. 
 THE BUILDING AND THE COST OF THE UNION PACIFIC. 
 
 It was not long after the passage of the Act of 1862 that 
 work under it began. The Central Pacific Railroad Company, 
 to which the building of the western end of the line was assigned, 
 had been organized, in 1861, under California state law. On i 
 October 7, 1862, it formally accepted the terms offered by Con- 
 gress, and the work of construction began January 8, 1863. 
 
 The Union Pacific Railroad Company, which was to build 
 the eastern part of the line, effected its temporary organization 
 according to the terms of the act, and books for stock-subscrip- 
 tions were opened in the leading cities of the country. Thirty- 
 one shares' of $1000 each were subscribed for, and $17,300 paid 
 in. There the matter stopped. Railway men knew that a mile 
 of road in Illinois cost $33,000; in Iowa, $35,000; in the level 
 parts of California, $34,000.° A considerable proportion of the 
 able-bodied men of the country was in the army, and the prices 
 of both labor and materials were abnormally high. Between the 
 eastern system of railways and the initial point of the proposed 
 road was a gap of hundreds of miles, making it necessary to 
 carry materials by way of the Missouri River, a hazardous and 
 costly mode of transportation. Under the circumstances, the 
 capitalists of the country did not consider the Union Pacific a 
 promising investment. 
 
 Meanwhile, Thomas C. Durant, of New York, a man of wide 
 experience in railway building and of large resources, became 
 
 'Forty-second Congress, third session; House Report No. 78, February 20, 1873 
 {Affairs of the Union Pacific Railroad Company — Mr. J. M. Wilson, Chairman), 
 Testimony talcen by the Committee, p. 604. 
 
 = Congressional Globe, Fortieth Congress, second session, p. 2427. 
 
 17 
 
1 8 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 interested in the enterprise and took hold of it with character- 
 istic vigor. He not only made a stock-subscription of his own, 
 but also secured subscriptions among his friends. To do this 
 he advanced for them the lO per cent, required by law to be paid 
 in before the permanent organization could be effected, and 
 agreed to find persons to take it off their hands in case they 
 wished to withdraw from the venture. On October 29, 1863, 
 2177 shares of ^looo each had been subscribed for' and a board 
 of thirty directors was chosen. In the list we find such names 
 as August Belmont, of New York ; C. A. Lambard, of Boston ; 
 C. S. Bushnell, of New Haven ; Joseph H. Scranton, of Scranton, 
 Pennsylvania ; J. Edgar Thompson, of Philadelphia ; S. C. Pom- 
 eroy, of Atchison, Kansas, besides those who were next day 
 chosen officers. These were: President, General John A. Dix; 
 Vice-President, Thomas C. Durant ; Secretary, H. V. Poor, 
 and Treasurer, J. J. Cisco, all of New York. Immediately after 
 organization was effected men were put to work, ground being 
 broken at Omaha December 2, 1863.3 The sum of g2i8,ooo 
 which had been paid in on stock-subscriptions was used up, and 
 debts contracted for from ^200, 000 to $300,000 more. The com- 
 pany was so hard pressed on these debts that it finally resorted 
 to the expedient of selling part of the materials and cars to raise 
 funds.'' 
 
 The line as first projected ran west from Omaha, but as heavy 
 grades would thus be encountered, a somewhat circuitous route 
 was finally settled upon, starting south from the city.s Still the 
 first thirty or forty miles were expensive. 
 
 As this section of the road approached completion it was 
 seen that New York capitalists were not to be induced to put the 
 enterprise through f work must soon cease for lack of funds. On 
 
 ^Affairs of the Union Pacific Railroad Company, p. 599. 
 
 ^ Ibid., p. 579. 
 
 i Report of the Directors of the Union Pacific Railway Company for 1884. 
 
 ^Affairs of the Union Pacific Railroad Company, p. 63. 
 
 ^ Ibid., p. 39. 
 
 "^ Ibid., p. 39. 
 
BUILDING AND COST OF THE UNION PACIFIC. ig 
 
 May 12, 1864, therefore, a committee was appointed to let a con- 
 tract for building one hundred miles of road." 
 
 The enactment of the Act of 1864 followed soon after this, 
 doubling, as has been said, the funds from which to build the road. 
 
 Even then the friefids of Durant were so doubtful of the 
 success of the enterprise that they availed themselves of the offer 
 made them when they subscribed, and Durant was made respon- , / 
 sible for three-fourths of the sum (^2,000,000) required to be 
 subscribed before organization was authorized." 
 
 As a result of the labors of the committee appointed in the 
 preceding May, a proposal was received on August 8, 1864, from 
 H. M. Hoxie, to build one hundred miles of road at ^50,000 per 
 mile. This matter was arranged at New York between Durant 
 and H. C. Crane, who acted as Hoxie's attorney. 3 Crane was 
 intimately connected with the Union Pacific as stockholder, 
 director and otherwise; Hoxie was an employee of the road. 
 Oliver Ames says distinctly that Hoxie was a man of no means,'' 
 of no responsibility. 5 Still Durant declares that the Hoxie con- 
 tract was made in good faith.* At any rate it was accepted,' and 
 October 4, 1864, Hoxie proposed its extension to cover the line 
 from Omaha to the one-hundredth meridian. This proposal was 
 likewise accepted.^ So H. M. Hoxie, whatever his financial stand- 
 ing may have been, stood bound to construct for the Union Pacific 
 Company 247^^^ miles of road, for which he was to receive over 
 
 gl2,000,000. 
 
 Aside from the relations existing between Durant, Crane and 
 Hoxie, the terms of the contract would lead one to suspect that 
 there was some purpose in mind other than that which appeared 
 
 'Forty-second Congress, third session; House Report No. 77, February 18, 1873 
 (Credit Mobilier Investigation — Mr. Poland, Chairman), Testimony taken by the Com- 
 mittee, p. 365. 
 
 = Credit Mobilier Investigation, p. 388 ; Affairs of the Unio n Pacific Railroad Com- 
 pany, p. 515- 
 
 ^Affairs of the Union Pacific Railroad Company, part 2, p. 2. 
 
 •■Ibid., p. 256. T Ibid., part 2, p. 4. 
 
 ilbid., p. 285. ^ Ibid., part 2, p. 4. 
 
 ' Ibid., p. 69. 
 
20 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 on the face of the matter. The contractor was specifically- 
 exempted from paying more than ^8 5, 000 for any one bridge; the 
 excess in price of iron above S130 per ton at Omaha was to be 
 borne by the Company ; if required to Burnetize' ties, an additional 
 16 cents per tie was to be paid; and, most important, acceptance 
 of the contract bound the contractor to subscribe, or cause to be 
 subscribed to the capital stock of the Union Pacific, ^500,000.^ 
 
 Asearly as September 30, 1864, that is, some time before its 
 extension had been voted, Hoxie had agreed with Durant to 
 assign his contract to such parties as he (Durant) might desig- 
 nate. October 7, 1864, an agreement was drawn up binding its 
 signers to take the contract from Hoxie and to subscribe for 
 carrying it out the sum of ^1,600,000. This liability was divided 
 as follows : Thomas C. Durant, ^600,000 ; C. S. Bushnell, 
 $400,000 ; Charles A. Lambard, gioo,ooo; H. S. McComb, 
 $100,000; H. W. Gray, $200,000 ; etc.3 According to the terms 
 of the agreement one-fourth of the sums subscribed was paid in, 
 $400,000 in all, and this amount was used on the road. The 
 men who had assumed the Hoxie contract now stood in the rela- 
 tion of partners, liable not only for the sums subscribed, but to 
 the extent of their fortunes. Some of them became fearful and 
 concluded that it would be better to lose the sums already sunk 
 in the enterprise than to go on and take greater risks.'* They 
 therefore failed to respond to the call for the second installment 
 of their subscriptions. ^ 
 
 About this time, August 1865, an important step was taken 
 in getting the brothers, Oakes and Oliver Ames, to take hold of 
 the project.^ Oakes Ames had become interested in the Pacific 
 railway while a -member of the Committee on Railroads in the 
 House of Representatives,' and his personal influence in Massa- 
 
 ' A process by which Cottonwood ties were made more durable. 
 
 ^ Affairs of the Union Pacific Railroad Company, part 2. p. 2. 
 
 3 Ibid., part 2. p. 5. 
 
 ''Ibid., p. 64, and Credit Mobilier Investigation, p. 365. 
 
 ^Affairs of the Union Pacific Railroad Company, p. 365. 
 
 ''Ibid., p. 4. 
 
 ' Oakes Ames Memoir, p. 5. 
 
BUILDING AND COST OF THE UNION PACIFIC. 21 
 
 chusetts, together with his great financial strength, made him a 
 valuable ally of those who had started the road. Plans for pro- 
 ceeding were again discussed, and it was agreed that the only 
 feasible way to enlist the necessary capital was to make use of a 
 construction company. The scheme of building railways by con- 
 struction companies organized among the stockholders was not 
 new ; it had been tried successfully in Iowa.' Exhaustive con- 
 tracts were not a new device. ° So all the Union Pacific people 
 had to do was to adapt to their own uses methods which others 
 had elaborated. 
 
 It having been decided to make use of a construction com- 
 pany, an examination of charters followed. This led to the 
 rejection of one which Bushnell had bought in Connecticut, 3 and 
 to the choice of a Pennsylvania corporation as better meeting 
 their needs. This was the Pennsylvania Fiscal Agency, which 
 had been chartered to build railways in the South and West'' 
 by an act of the state legislature of Pennsylvania, approved 
 November i, 1859.= On the fifth of the same month books 
 had been opened in Philadelphia and stock subscribed for.^ 
 Later it became known that the organization then effected was 
 irregular, and it was treated as a nullity. ' May 29, 1863, books 
 were again opened, stock subscribed, the required per cent, paid 
 in, and organization properly effected.^ March 2, 1864, Durant 
 opened negotiations for the purchase of the charter-rights of the 
 Fiscal Agency, and on the following day the bargain was closed, 
 Durant paying to the original subscribers what they had invested, 
 they assigning their stock.^ Previous to this time there had 
 been no connection whatever between the men of the Union 
 Pacific and of the Fiscal Agency. 
 
 On March 26, 1864, an amendatory act changed the name 
 from the Pennsylvania Fiscal Agency to the Credit Mobilier of 
 
 ^Affairs of the Union Pacific Railroad Company, p. 164. 
 'ilbid., p. 420. ^Ibid., p. 39. 
 
 < Credit Mobilier Investigation, p. 199. 
 ^Affairs of the Union Pacific Railroad Company, p. 7. 
 ''Ibid., p. 144. ^Ibid., p. 146. 
 
 Tibid., p. 146. ■^Ibid., p. 147. 
 
22 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 America,^ and as such it later became widely known. Thus the 
 Credit Mobilier became an adjunct of the Union Pacific Railroad 
 Company. 
 
 The reason for securing such a company as the Credit Mobilier 
 is obvious. No firm could be induced to undertake the building 
 of the road if each member was liable to the extent of his prop- 
 erty .= The risk was too great. But it was believed that if a 
 company was secured in which the liability was limited to the 
 /amount of the subscription to stock, as in the Credit Mobiher, 
 capital could be enlisted. This proved to be the case, and the 
 necessary funds were quickly subscribed. 
 
 As a matter of convenience the offices of the Credit Mobilier 
 were to be in New York, where the headquarters of the railway 
 were located, but under the terms of its charter it could not cease 
 to be a Pennsylvania corporation. To get around this difificulty, 
 the device of a New York branch was resorted to. The cor- 
 porate existence of the Credit Mobilier was maintained in Penn- 
 sylvania, the board of directors, the ofiicers, and the executive 
 committee being elected at meetings held in Philadelphia. This 
 executive committee then chose from among the stockholders of 
 the Credit Mobilier and of the Union Pacific, a number of men 
 to constitute what they called a railway bureau.^ This body had 
 its office in a room adjoining the offices of the Union Pacific' 
 The executive committee attended to all the larger fiscal trans- 
 actions, while the railway bureau had charge of the construction 
 of the road, payments for work, and other details.^ Under this 
 arrangement the work progressed satisfactorily. Part of the 
 necessary capital of the Credit Mobilier was secured by trans- 
 ferring to its books the subscriptions which had been made for 
 carrying out the Hoxie contract by the men who assumed it.* 
 They were relieved of their former obligations by the transfer 
 of the Hoxie contract to the corporation of which they had 
 just become stockholders. This change was made March 15, 
 
 * Affairs of the Union Pacific Railroad Company, p. 9. 
 'Ibid., pp. 39-40. ilbid., p. 153. 
 
 'Uid.,-f'p. 148, 131. ^Ibid.,-^. 148. 
 
 ^ Credit Mobilier Investigation, p. 366. 
 
BUILDING AND COST OF THE UNION PACIFIC. 23 
 
 1865,' some six months after they had taken the contract off 
 Hoxie's hands. The transferred subscriptions, $1,600,000, were 
 supplemented by others, securing for the Credit Mobiher a 
 working capital of upwards of $2, 000,000,= and the work, which 
 otherwise must have stopped within sixty days, was pushed 
 vigorously .3 
 
 But note how incongruous was this arrangement. The Credit 
 Mobilier was nominally a Pennsylvania corporation, while at the 
 Pennsylvania office no business was done. The New York con- 
 cern was in form only a branch of the Pennsylvania corporation, 
 yet it transacted all the business which the Credit Mobilier ever 
 had. The Union Pacific Railroad was being built, not by the 
 Union Pacific Company, but by the Credit Mobilier, and the Union 
 Pacific officers simply got the resources into available shape and 
 turned them over to the Credit Mobilier. The United States 
 bonds it sold and transferred the cash. Sometimes it turned 
 over the proceeds of the sale of first-mortgage bonds, sometimes 
 the bonds themselves. 
 
 This state of affairs was in part due to the unfortunate loose- 
 ness with which the Pennsylvania legislature had framed the 
 Credit Mobilier charter. The practice of granting charters con- 
 taining almost no limitations was at that time common. Unfor- 
 tunately it is not yet unknown. 
 
 Under the new impulse which the Credit Mobilier gave to the 
 enterprise, the work of construction was carried forward so 
 rapidly that during the year 1866 the government passed upon 
 and accepted 270 miles of track as meeting the requirements of 
 the law. 
 
 About the time when the road had reached the one-hundredth 
 meridian, quite a number of the stockholders of the Credit 
 Mobilier had become large stockholders of the Union Pacific, 
 among them Mr. Ames, Mr. Dillon, and Mr. Duff. Naturally 
 they desired to be represented on the Union Pacific board, and 
 
 ^Affairs of the Union Pacific Railroad Company , p. 64. 
 
 2 Credit Mobilier Investigation, p. 366. 
 
 ^Affairs of the Union Pacific Railroad Company, p. 659. 
 
24 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 Oliver Ames and two or three others, at the election of October 
 3, 1866, went into the directory of the Union Pacific' From 
 this time on there were two factions among the Union Pacific 
 people, one headed by Durant, the other by Oakes Ames. 
 Durant's claim to leadership lay in the importance of what he 
 had already accomplished. Ames had yet to win his spurs. It 
 has repeatedly been said that the struggle between Durant and 
 Ames was due to their different views as to the Union Pacific 
 enterprise and their different motives in taking it up. Durant is 
 said to have believed that the road would be a commercial 
 failure, and that the only money to be made out of it was to be 
 made on construction contracts ; while Ames believed in the 
 future of the road and looked to the legitimate business of the 
 road after its completion for his profit. The evidence as to con- 
 tracts made by these men for construction, however, does not 
 exhibit any great rapacity on Durant's part, nor any great ten- 
 derness toward the road on Ames's part. It seems that the fric- 
 tion between these men was rather of a personal nature. Durant 
 carried the enterprise as far 'as his resources would allow, and 
 then had to give way to Ames. Whoever had succeeded him as 
 leader would probably have aroused Durant's jealousy and had 
 his opposition to contend with. 
 
 Be that as it may, the decided friction between the two 
 parties manifested itself repeatedly when the letting of contracts 
 was under discussion, and the execution of several engagements 
 which had been formally entered into was prevented. Of this 
 sort were five which deserve attention. Their history shows the 
 internal difificulties of the company, which were at times so 
 serious as to carry the questions into court. It also shows the 
 evolution of the terms of the contract under which the most 
 difficult parts of the road were built, the Ames contract. 
 
 The first of these never-executed agreements is known as the 
 Boomer contract.'' Late in 1866 Durant made a contract with 
 
 ^Affairs of the Union Pacific Railroad Company, p. 598. 
 
 " On the books it is called the Gessner contract. Boomer appointed Gessner his 
 agent and later sold the contract to him. — Affairs of the Union Pacific Railroad Com- 
 pany, p. 69. 
 
BUILDING AND COST OF THE UNION PACIFIC. 25 
 
 L. B. Boomer, of Chicago, which called for the building of 150 
 miles of road, beginning at the one-hundredth meridian. East 
 of the North Platte River the price stipulated was ^19,500 per 
 mile, exclusive of equipment. The bridge over that stream was 
 to *be paid for at actual cost. West of the river the price was 
 $20,000 per mile. By paying for work already done and giving 
 ten days' notice, Durant could at any time terminate this arrange- 
 ment.' President Dix, Treasurer Cisco, and other conservative 
 members of the board sustained Durant in his action in regard to 
 this contract,'' but it was never approved by the board as a 
 whole.3 Oliver Ames afterward declared that the Boomer con- 
 tract was a secret arrangement, a bogus thing of Dr. Durant's, 
 and that Boomer was a man of no responsibility.'' At any rate, 
 the Credit Mobilier, although it had received no new contract, 
 continued to build the road west of the one-hundredth meridian 
 precisely as it had done east of that point. This was done in 
 expectation of another contract on the same terms as the Hoxie 
 contract, and as the stockholders of the Credit Mobilier and of 
 the Union Pacific were the same persons ^ this expectation was 
 not likely to prove without foundation. 
 
 Durant's move in regard to the Boomer contract having been 
 successfully met, the next one was made by the other side. 
 There was presented to the board of directors of the Union 
 Pacific, on the 5th of January 1867, a resolution extending the 
 Hoxie contract to the point then completed, namely, 305 miles 
 west of Omaha, and authorizing the officers to settle with the 
 Credit Mobilier for the added 58 miles at $50,000 per mile. By 
 a vote of eight to four the resolution was passed.^ According to 
 the Act of 1864,7 the President of the United States appointed 
 five members of the board of directors of the Union Pacific who 
 should protect the interests of the government. The four votes 
 against the extension of the Hoxie contract were cast by gov- 
 
 ' Affairs of the Union Pacific Railroad Company, part 2, p. 7. 
 
 ^ Credit Mobilier Investigation, p. 368. 
 
 i Affairs of the Union Pacific Railroad Company, p. 67. 
 
 •■Ibid., p. 285. ^Ibid., p. 67. 
 
 ^Ibid., p. 284. 'Section 13, p. 113, below. 
 
26 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 ernment directors, one voting in favor of it.' Durant, who was 
 absent on necessary business of the company when this resolu- 
 tion was passed, entered a protest against its being carried out, 
 and also served an injunction on the ofificers to prevent their 
 making the proposed payments. His objections were tKat, 
 although the Hoxie contract was originally let in good faith, no 
 one being interested in it, the Credit Mobilier and the Union 
 Pacific had since become identical in interest, and that this exten- 
 sion was simply letting a contract to themselves ; that no new 
 subscriptions to the Union Pacific stock were required because of 
 this extension ; that this strip of road, built at much less cost 
 than the proposed price, had been accepted by the government 
 as completed, and so that carrying out this contract would entail 
 heavy loss upon the company, as the actual cost of this part of 
 the road, when fully equipped, was about 827,500 per mile. Jan- 
 uary 24, nineteen days after its passage, the order to extend the 
 contract was rescinded. ° 
 
 The condition of the finances of the two closely allied corpo- 
 rations made it necessary, early in 1867, earnestly to attempt 
 measures of betterment. One form which this effort took is 
 shown by a letter of February 13. The Credit Mobilier proposed 
 to purchase of the Union Pacific, land-grant bonds to the amount 
 of 83,000,000, at 80 ; first-niortgage bonds to the amount of 
 $2,060,000 at 85 ; certificates convertible into first-mortgage bonds 
 to the amount of 8750,000, at 80, these certificates to bear 6 per 
 cent, interest until exchanged. The Credit Mobilier further pro- 
 posed to loan or procure to be loaned to the Union Pacific 
 81,250,000 on four months' time, at 7 per cent, annual interest 
 and 2y^ per cent, commission, with first-mortgage bonds at 66^ 
 per cent, as security. On the other hand, the Union Pacific was 
 to pay to the Credit Mobilier the balances due on previous debts 
 at least as soon as the Credit Mobilier had paid for the securities 
 named above. It was also provided that the Hoxie contract 
 should be extended 100 miles west of the one-hundredth merid- 
 
 ^ Affairs of the Union Pacific Railroad Cotnfany, p. 67. 
 ^ Ibid., pp. 68-70. 
 
BUILDING AND COST OF THE UNION PACIFIC. 2/ 
 
 ian at ^42,000 per mile.' This arrangement would have given 
 the Union Pacific ^6,001,000 of ready funds. As the contract 
 price was considerably in excess of what this part of the road 
 was actually costing, it would have given the Credit Mobilier a 
 profit in hand on that part of the lOO miles of road which had at 
 that time been completed, and an inconsiderable risk on the 
 remainder of what the contract covered. The executive com- 
 mittee of the Union Pacific accepted this proposition,'' but it was 
 not carried out. 
 
 However, an understanding was reached about this time that 
 whenever a contract was entered into, it should be so placed that 
 the benefit would inure to the stockholders of the Credit Mobi- 
 lier. On the strength of this understanding the capital stock of 
 the Credit Mobilier was increased. This was originally intended 
 to be g2, 000, 000; September 21, 1865,3 it was made ;S2, 500,000 
 nominally, although not all of the new stock was taken up ;"* now, 
 in February 1867, it was increased to ;^3,750,000. The difficulty 
 in getting the old subscribers to take this new stock was met in 
 this way: for Siooo in cash there was promised iSiOOO in Credit 
 Mobilier stock and a giooo first-mortgage bond of the 
 Union Pacific. That this offer would prove attractive will 
 appear when it is considered that the first-mortgage bonds were 
 then worth 85, thus leaving the Credit Mobilier stock to represent 
 15 per cent, of the price paid. On these terms the new stock 
 was all taken and the cash turned over to the Union Pacific in 
 payment for bonds. The ^1,250,000 thus put into the Union 
 Pacific treasury was used to cancel a part of the $3,500,000 or 
 ^4, 000, 000 of debt which it then owed.' 
 
 Having spent this sum, things came to a standstill again 
 almost as bad as before. The Union Pacific then allowed Bush- 
 nell to undertake the sale of a large block of first-mortgage bonds 
 which it had on hand and on which it was borrowing money at 
 
 ^ Credit Mobilier Investigation, p. 17 !■ 
 'Affairs of the Union Pacific Railroad Company, p. 172. 
 iilbid.,-p.li. ^nid.,f.i\o. 
 
 *Ibid., p. 15. . 
 
28 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 extravagant rates of interest, up to I4j^ per cent." By wide 
 advertising and great diligence Bushnell met vifith marked suc- 
 cess, and in less than six months bonds were sold to the amount 
 of ^10,000.000, the price being put up from 90 to 95.^ Thus the 
 financial difficulties were removed. 
 
 To carry out the tacit agreement made in February, that 
 the Credit Mobilier stockholders should have the profits on con- 
 structing the road, attempts were made to let contracts direct to 
 that corporation, but Durant objected on account of the identity 
 of the two organizations and twice prevented such action by 
 injunctions.3 
 
 One of these attempts gave rise to what is known as the 
 Williams contract. March i, 1867, John M. S. Williams pro- 
 posed to the company to take the building of 267.57 miles of 
 road westward from the one-hundredth meridian as the initial 
 point, the price for the first 100 miles being $42,000 per mile, 
 for the remainder $45,000 per mile. As another feature of the 
 contract Williams was to bind himself to procure subscriptions 
 for Union Pacific stock to the amount of $1,500,000. The 
 board accepted his offer and gave instructions that a contract be 
 drawn up on this basis. Williams assigned the contract to the 
 Credit Mobilier, and the Credit Mobilier accepted the assign 
 ment. Then Durant, on March 27, entered a protest against 
 letting this contract, stating as grounds that part of the road 
 was already built and accepted by the government, that the 
 price was too high, that no time limit for completing the work 
 was specified. His protest was backed up by an injunction, so 
 nothing was done in the matter. This protest shared the same 
 fate as his previous one — both were expunged from the minutes.'' 
 
 June 24, 1867, Williams again made a written proposal to 
 the Union Pacific. It was this : To build the road from the 
 one-hundredth meridian to the base of the Rocky Mountains, 
 267.52 miles, at $50,000 per mile, the work to be completed 
 
 ^Affairs of the Union Pacific Railroad Company, p. 41. 
 
 = Ibid., p. 42. ^ Ibid., pp. 70-I. 
 
 3 Ibid., p. 41. 
 
BUILDING AND COST OF THE UNION PACIFIC. 29 
 
 before January I, 1868. The provision for a stock subscription 
 was omitted this time. Another proposal accompanjdng this • 
 one was to assign the contract, if received, to the Credit Mobi- 
 lier.' The June proposal, like the one made in March, came to 
 naught. This ends the series of failures at contract-making. 
 
 It had been anticipated that great difiSculty and heavy expense 
 would be met in crossing the Rocky Mountains, but during 1867 
 it became generally known that there was an easy route by way 
 of the Black Hills, requiring no grade heavier than ninety feet to 
 the mile, and knowledge of this fact greatly strengthened confi- 
 dence in the completion of the road. This route lay through 
 what had previously been called the Cheyenne Pass, Cheyenne 
 and Sherman being located there. From this time on it was 
 called the Evans Pass, it having been discovered by an engineer 
 named Evans, acting under the guidance of the chief engineer of 
 the road, General Dodge.'' 
 
 Meanwhile construction was being pushed. The Hoxie con- 
 tract had been completed to the one-hundredth meridian October 
 
 '■Affairs of the Union Pacific Railroad Company, pp. 162-3. 
 
 = The way in which this pass was located is interesting. General Dodge says: 
 " Of course the key to any line crossing the continent is the crossing of the Rocky 
 and other mountains. As you know, they are the Black Hills, the divide of the conti- 
 nent, the Wasatch Mountains, the Humboldt and the Cascade. The line east of the 
 Rocky Mountains was entirely controlled by where we could cross those mountains. 
 It took several years before we could discover that point. It was finally discovered by 
 my running what was known as a foot line at the base of the mountains, from the 
 Laramie River to the south, and a summit line at the top of the mountain, and finding 
 the lowest point in the summit and the highest point in the plains. That happened to 
 
 be at Sherman and Cheyenne That, of course, controlled the line from the 
 
 Rocky Mountains east to the Missouri River." — Fiftieth Congress, first session ; Sen- 
 ate Executive Documents, No. 51 {Report of the Commission and of the Minority Com- 
 missioner of the United States Pacific Railway Commission Appointed by the Act of 
 Congress Approved March j, 1887. — R. E. Pattison, Chairman), p. 3792. 
 
 Just when the character of the Evans Pass became known to the builders of the 
 Union Pacific cannot be said. An engineer's report of November 23, 1866, spoke very 
 accurately about it. One of the directors, Mr. Williams, was thoroughly acquainted 
 with both the engineer's reports and the country through which the road ran. Durant 
 also knew the reports pretty well. But Bushnell, who on the whole was very well 
 informed as to the affairs of the Union Pacific, says he does not think any other mem- 
 ber of the board knew anything about the matter until late in 1867. It would be inter- 
 esting to know whether or not knowledge of this easy route came before the letting o 
 
30 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 5, 1866,' and beyond that point the Union Pacific made all its 
 bargains for work subject to any future contract which might be 
 let.' By August 16, 1867, 188 miles more had been built,^ and 
 a letter of that date from Oakes Ames proposed the terms on 
 which he would become responsible for building the 667 miles of 
 road beginning at the one -hundredth meridian.t The board 
 passed a resolution the same day directing the officers to obtain 
 the written consent of the stockholders, a provision upon which 
 Durant insisted,^ and then to ratify the contract, giving Ames the 
 option of extending it westward to Salt Lake if he chose.^ The 
 prices specified were : 100 miles at ^42,000 per mile, 167 at ^45,- 
 000, 100 at $96,000, 100 at S8o,ooo, 100 at $90,000, 100 at S96,- 
 000.7 Thus Ames assumed a contract aggregating $47,915,000. 
 These prices, although high for the eastern sections of the 
 part which they covered, were, on the whole, perhaps not exor- 
 bitant. The rates for the western sections would undoubtedly 
 have been made considerably higher if the eastern part with its 
 assured profit had not been included. Moreover, this contract 
 insured the building of the difficult portions by providing that 
 when the proceeds of the bonds were not sufificient to pay the 
 contract prices, the contractor should subscribe for enough stock 
 to furnish the money for paying the balance. In other words, 
 Ames was bound to take in stock, at par, that part of his pay 
 which was not produced by selling the two kinds of bonds. In 
 no other way could security have been obtained for the building 
 of the difificult and risky portions of the road. In fact, it was 
 impossible to let contracts to outsiders for even the easy portions 
 of the road. John Duff, who had done a great deal of work of 
 
 the next contract which we have to consider, the most important one of all which were 
 made. But unfortunately definite information as to this date is not forthcoming. — 
 Affairs of the Union Pacific Railroad Company, pp. 42, 43, 85, 92, 238, 239, 252-3, 508, 
 550-1, 651. 
 
 ' Affairs of the Union Pacific Railroad Company, p. 65. 
 
 'Ibid., p. 115. ^Ibid., p. 113. 
 
 * Credit Mobilier Investigation, p. 365. 
 
 5 Affairs of the Union Pacific Railroad Company, p. 542. 
 
 ' /iSz'a'., part 2. p. 12. 7 Ibid., p. 10. 
 
BUILDING AND COST OF THE UNION PACIFIC. 3 1 
 
 this sort, made repeated efforts to let contracts among experi- 
 enced and competent contractors, appealing to his own sub-con- 
 tractors in his attempts to find some one who would do the work, 
 but he was unable to get anyone to go out there.' Horace 
 Clarke said, in 1873, that he thought the Ames contract the wild- 
 est contract he ever knew to be made by a civilized man.' Be 
 that as it may, the work was pushed to completion under it. 
 
 Although this contract did not intimate in its terms that any- 
 one besides Oakes Ames and the Union Pacific Railroad Com- 
 pany was in any way concerned in the matter, there undoubtedly 
 existed a more or less definite understanding that the persons to 
 profit thereby were the stockholders of the Credit Mobilier.3 The 
 arrangement by which the profits were distributed to them is 
 described in the tripartite agreement, which was signed October 
 15, 1867.'' General Benjamin F. Butler suggested this form of 
 contract as obviating the difficulty which would arise if any single 
 stockholder of the Credit Mobilier should object to the transfer 
 of responsibility to that organization. ^ The party of the first 
 part was Oakes Ames, who then held the contract, and who 
 assigned it to the party of the second part. Seven trustees con- 
 stituted the party of the second part, and they bound themselves 
 to carry out the contract according to its terms, and to distribute 
 the profits thereupon among those stockholders of the Credit 
 Mobilier who should execute to them an irrevocable proxy on at 
 least six-tenths of any Union Pacific stock which they then 
 owned, or which they in future might own. This power to vote 
 a majority of the Union Pacific stock insured the trustees against 
 the election of a Union Pacific board hostile to the interests of 
 the Credit Mobilier. The men named as trustees were Oliver 
 Ames, T. C. Durant, J. B. Alley, Sidney Dillon, C. S. Bushnell, 
 H. S. McComb, and Benjamin E. Bates. The party of the third 
 part was the Credit Mobilier, which guaranteed the carrying out 
 of the contract and bound itself to loan the trustees what funds 
 
 ' Affairs of the Union Pacific Railroad Company, p. 493. 
 "^ Ibid., p. 405. * Ibid., part 2. pp. 13-16. 
 
 Ibid.,^.S. ^ /bid., p. 6S4. 
 
32 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 they needed, receiving therefor 7 per cent, interest and 2)^ per 
 cent, commission. 
 
 Noteworthy changes in the standing of the Union Pacific 
 enterprise had taken place since 1864. Then the Credit Mobilier 
 had to be secured in order to limit liability and get enough cap- 
 ital to continue construction. In 1868 there was no difficulty in 
 getting capital to take hold of the Ames contract. The proxies 
 which were required, and which were readily given to the trustees, 
 were so worded -that they made each stockholder of the Credit 
 Mobilier a partner in* the enterprise- — just what the Credit 
 Mobilier had been made use of to avoid — and the trustees went 
 to work with $50,000,000 back of them. Until the connection 
 of the Credit Mobilier with the Ames contract was known, the 
 stock of that corporation had never had a market value. Then it 
 immediately went far above par, and what few sales were made 
 were at fancy figures like 260. 
 
 As has already been said, the Credit Mobilier continued to 
 build the road beyond the one-hundredth meridian, where its 
 contract ceased, knowing that proper credit for its work would 
 be given when the final contract was let. We have seen that 
 when Ames's proposal was made, 188 miles had already been 
 built. By the time he assigned the contract to the trustees, 50 
 miles more had been finished.' This first part of the work 
 embraced under the Ames contract was not expensive, and what 
 was to be paid for it was some $2,500,000 or $3,000,000 in excess 
 of its cost to the builder.^ So the trustees, with this sum in hand, 
 made haste to carry out their obligations. 
 
 As Ames did not wish to extend his contract beyond the 667 
 miles which it originally covered,^ Durant, to avoid delay, made 
 a contract in November 1868, with James W. Davis, a sub-con- 
 tractor, to build the remainder of the road. The Davis contract 
 took the Ames contract as its basis, and an accompanying agree- 
 ment provided for its assignment to the same trustees who exe- 
 cuted the Ames contract. A resolution of the board of directors 
 
 ' Affairs of the Union Pacific Railroad Company, p. 114. 
 ° Ibid. 3 Ibid., p. 4. 
 
BUILDING AND COST OF THE UNION PACIFIC. 33 
 
 of the Union Pacific approved Durant's action, and a committee 
 was appointed to obtain the necessary consent of the Union 
 Pacific stockholders.' Thus without any change of machinery 
 the work went on. 
 
 Construction on the western part of the road was pushed 
 with unprecedented vigor, winter not being allowed to stop work. 
 There were several reasons for this haste. Public opinion, which 
 the government directors voiced, urged it.^ To put capital into 
 the road and postpone its productiveness by not opening it to 
 traffic until 1 87 5, the limit set by the Act of 1864, would have 
 crushed the company under the accumulation of interest. The 
 Salt Lake business and a "governing point" for the traffic of 
 that region was a prize to be gained only by rapid work. 3 Late 
 in the construction period the desire to meet the Central Pacific 
 as far west as possible became a motive. So the work was done 
 with marvelous speed. Four or five miles of track were laid per 
 day, and items of expense which should have been $600 per mile 
 were made S1500 instead. + By such methods the Union Pacific 
 and the Central Pacific were joined May 10, 1869.5 
 
 •■Affairs of the Union Pacific Jiailroad Company, p. 17.. ' Ibid., p. 563, 
 
 "Ibid., p. 664. ''Ibid., p. 510. 
 
 5 The facts of the construction period thus far related may be brought together by 
 the aid of the accompanying diagram : 
 
 Ogden Omaha 
 
 J°42 935 S£5 400 347iVi; 305 247A'V 100 35 
 
 
 
 
 
 V 
 
 "JT'I 
 
 
 1 
 
 
 
 H 
 
 - 
 
 
 o\ 
 
 W 
 
 
 4 
 
 
 
 •i 
 
 
 
 ^ 
 
 
 
 
 
 
 m 
 
 
 
 
 
 
 \0 
 
 
 , 
 
 
 1. Built by Union Pacific Company, largely with Durant's money. 
 
 2. Hoxie Contract. 
 
 3. Hoxie Contract extension. 
 
 4. Assigned to Credit Mobilier., 
 
 5. Built by Credit Mobilier. 
 
 6. First proposed extension to Hoxie Contract. 
 
 7. Proposed Hoxie Contract extension, coupled with purchase of S6,ooo,ooo of 
 securities. 
 
 8. Boomer Contract. 
 
 9. I. Williams Contract of March I, 1867. 
 II. Williams Contract of June 24, 1867. 
 
 10. Ames Contract. 
 
 11. Davis Contract. 
 
34 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 This saving of six years of the time allowed by the law for 
 completing the road doubled the cost to the builders. By 
 increasing the working force the chance of accidental delays was 
 increased, and the costliness of such delays likewise increased. 
 Just before the Ames contract was let, the Union Pacific was 
 obliged to borrow money in New York to use on the road, for 
 which it paid 1 8 or 19 per cent.' By pushing the road out beyond 
 the bounds of civilization and not waiting for the slower pace of 
 the settler, it often became necessary for one-half the force to 
 stand guard while the other half worked. ° Hundreds of work- 
 men were killed by the Indians. 3 
 
 Thus far the managers of the enterprise were responsible for 
 the increased cost ; they could have avoided it by adopting a 
 different policy. But there were other items of needless cost 
 which they could not avoid. For these the government alone 
 was to blame. 
 
 The requirement that only American iron be used on the road 
 increased the cost $10 for every ton of rails laid.'' An incident, 
 ypical rather than intrinsically important, is that of two govern- 
 ment directors who insisted that a cut should be made through 
 each rise in the Laramie plains, giving the track a dead level, 
 instead of conforming it to the profile of the ground. As snow 
 blockades made it necessary to refill these cuts later, there was a 
 waste of from ;^5,ooo,ooo to gio, 000,000. At the crossing of 
 the North Platte, machine shops were called for which cost per- 
 haps $300,000. To the company they were not worth three 
 cents. 5 Another of a worse sort concerned a government com- 
 missioner, Cornelius Wendell, appointed to examine the road and 
 report whether or not it met the requirements of the law, who 
 flatly demanded $25,000 before he would proceed to perform his 
 duty. As a considerable section of road awaited acceptance, 
 and as acceptance must precede the drawing of subsidies, his 
 
 'Affairs of the Union Pacific Railroad Company, p. 252. 
 
 "/liiiV., p. 431. 3/|}/a'., p. 494. 
 
 ^ Credit Mobilier Investigation, p. 255. 
 
 5 Affairs of the Union Pacific Railroad Company, p. 432. 
 
BUILDING AND COST OF THE UNION PACIFIC. 35 
 
 demand was paid in the same spirit in which it was made — as 
 just so much blood-money.' Such results were bound to follow 
 when the government made its power to appoint commissioners 
 a means of distributing political patronage.^ 
 
 As steps toward answering the question, What did the build- 
 ing of the Union Pacific yield as profit? the capitalization and the 
 cost must be considered. 
 
 The property, at the close of the period of construction, stood 
 burdened with four kinds of bonds — United States bonds, its own 
 first-mortgage bonds, land-grant bonds, and income bonds. Of 
 the government bonds there were issued the full quota — 
 $27,266,512 on 1038.68 miles of road.3 The aggregate of first- 
 mortgage bonds was slightly less than this sum, $27,213,000.'* 
 Of land-grant bonds there were outstanding $10,400,000, and of 
 income bonds, $9,355,000. Thus the total indebtedness repre- 
 sented by the four kinds of bonds was $74,234,512. 
 
 The stock of the road subscribed for when organization was 
 effected was slightly in excess of the $2,000,000 required, s and 
 was owned in various quarters. As early as December I, 1864, 
 the Credit Mobilier began to buy in these shares, and succeeded 
 in acquiring almost all of them.* By the time the Ames contract 
 was let, the $2,000,000 had increased to about $5 ,600,000.' Under 
 the Ames and Davis contracts the trustees subscribed, at various 
 times as the work proceeded, according to the terms of those 
 contracts, for $30,096,000 of stock,^ and when the road was done 
 the stock issued was $36,762,300. Thus the total capitalization 
 of the road was $110,9^6,812. 
 
 But this sum does not represent the cost of the road. From 
 the books of the Union Pacific and the Credit Mobilier, it appears 
 that the expenditures by the Union Pacific directly amounted to 
 $9,746,683.33 ; and that the actual expenditures under the Hoxie, 
 
 '■Affairs of the Union Pacific Railroad Company, p. 471. 
 =/«</., p. 431. <• Ibid., ^. 20. 
 
 3/6id.,p.7s8. 7/^ea'., p. 72. 
 
 */6id., p. 590. ^liid., p. 642. 
 
 ^Ibid., p. 599. 
 
30 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 Ames, and Davis contracts were $50,720,957.94, making the total 
 cost of the road g6o, 467, 64 1.27.' 
 
 This should be compared with the sum received for bonds, 
 which is shown by the following table :" 
 
 First-mortgage bonds $27,213,000.00 
 
 Loss on same 3,494,991.23 
 
 $23,718,008.77 
 
 Land-grant bonds 10,400,000.00 
 
 Loss on same 4,336,007.96 
 
 6,063,992.04 
 
 Government bonds 27,236,512.00 
 
 Loss on same 91,348.72 
 
 27,145,163.28 
 
 Income bonds 9,355,000.00 
 
 Loss on same 2,818,400.00 
 
 6,536,600.00 
 
 Total S63, 463, 764.09 
 
 Cost of road 60,467,641.27 
 
 Excess of receipts from bonds over cost of road.. $ 2,993,122.82 
 
 There must be added to this sum, in order to get the cash 
 profit on building the road, the amount which was paid to the 
 Union Pacific by the Central Pacific for the section of road lying 
 between Promontory, which had been settled upon as the meet- 
 ing place of the two roads, and the point which is now the end 
 of the Union Pacific, some four or five miles west of Ogden.3 For 
 this transfer of the ownership of some fifty miles of road the 
 
 'The figures upon which this estimate is based were compiled by Mr. Benjamin 
 F. Ham, who was Assistant Secretary and Treasurer of the Credit Mobilier during 
 most of the period of its active existence. — Affairs of the Union Pacific Railroad Com- 
 pany, p. 371. 
 
 "Ibid., p. 590. 
 
 3 Those provisions of the chartering acts which were intended to spur the eastern 
 and the western companies to rapid building, in competition for the subsidies offered, 
 worked only too well. Instead of bringing the ends of the road together as soon as 
 possible, the two construction parties passed within sight of each other, and graded 
 two parallel lines. The Central Pacific went almost to Ogden and the Union Pacific 
 to Humboldt — points 170 miles apart — before a compromise was effected. The terms 
 of the compromise are indicated in the text. — Affairs of the Union Pacific Railroad 
 Company, p. II. 
 
BUILDING AND COST OF THE UNION PACIFIC. 37 
 
 Union Pacific received the sum of $2,698,620. This makes the 
 cash profit on the enterprise $5,691,742.82. 
 
 Then, in order to ascertain the total profit on construction, 
 there must be added the value of the whole amount of stock 
 issued. But what that value is cannot be said. The leading 
 men of the enterprise seemed unanimous in the opinion that a 
 fair valuation was 30. But Union Pacific stock has certainly 
 been above that point repeatedly, and it was down at one time 
 to 9. It has always been a speculative stock, the sales amount- 
 ing in a year to several times the total amount outstanding. But, 
 for the sake of getting an estimate of the profits made by the 
 builders of the Union Pacific, even though that estimate be 
 admittedly unreliable, the valuation given above may be taken. 
 At 30, the $36,762,300 of stock would be worth $11,028,690. w> 
 Adding this to the cash profit as stated above, the total profiV> 
 appears to be $16,710,432.82, or slightly above 273^ per cent, of ^ 
 the cost of the road. Considering the character of the under- 
 taking and the time when it was carried through, this does not 
 seem an immoderate profit. 
 
 to 
 
 
CHAPTER IV. 
 HISTORY OF THE BRANCH ROADS. 
 
 While the Union Pacific was filling with settlers a strip of 
 country stretching westward from Omaha, the other roads pro- 
 vided for in the charter acts were doing the same for other 
 regions. The early history of these related enterprises must be 
 traced as a basis for an understanding of their future relations.' 
 The most important of these branch roads is the Kansas Pacific, 
 the one spoken of in the chapter, on the charter acts as the Kan- 
 sas branch. 
 
 ■ Here, as well as anywhere else, may be given the few facts necessary to an under- 
 standing of the situation concerning the line which, in the Act of 1862, it was proposed 
 should run from Sioux City to join the Union Pacific at the one-hundredth meridian. 
 It was known as the Sioux City and Pacific. 
 
 To cross the Missouri immediately and proceed in a southwesterly direction, 
 would have given the whole land grant in Nebraska. There were more valuable lands 
 in western Iowa, so the projectors of the road chose a course slightly east of south 
 from Sioux City, and crossed the Missouri at a point only a little way above Omaha. 
 The junction with the Union Pacific was at Fremont, a small town lying a short dis- 
 tance west of Omaha. Besides securing a more valuable land grant than it otherwise 
 would have had, the company thus got a location where it would have a more lucra- 
 tive traffic. 
 
 John I. Blair and Oakes Ames were the leading men of the construction period, 
 and their profits cannot be learned. The subsequent financial history of the road was 
 unsatisfactory, but its location made the line valuable to the Chicago and North- 
 western, and in 1884 a controlling interest in the stock was bought by that company, 
 of which it has since been an appendage. The Sioux City and Pacific has never been a 
 part of the Union Pacific system, so it calls for no further attention. 
 
 The Central Pacific, although it is not a part of the system whose history this 
 work attempts to trace, is so closely related to the Union Pacific, both in origin and 
 commercially, that space may be spared for the merest outline of its history. 
 
 The Central Pacific Railroad Company was organized under California state law 
 in 1 86 1. It formally accepted the terms offered to it by the Act of 1862, and work 
 upon the road began January 8, 1863. The completion of the task was of course 
 simultaneous with the completion of the Union Pacific — May 10, 1869. 
 
 The company was organized by a circle of Sacramento merchants — Collis P. 
 Huntington, Leland Stanford, Mark Hopkins, and Charles Crocker. A few other 
 
 38 
 
HISTORY OF THE BRANCH ROADS. 39 
 
 In i86i^ the territorial legislature of Kansas granted a 
 charter to the Leavenworth, Pawnee and Western Railroad Com- 
 pany. At that time it was not uncommon for charters to be 
 obtained before plans for using them were fully matured. This 
 was a case of that kind, and consequently the charter was for 
 some time unused. The scheme of this corporation was, in its 
 inception, to build a road only from Leavenworth to Lawrence. 
 By a treaty with the Delaware Indians some 225,000 acres of 
 land lying some six miles from Leavenworth were bought, and 
 then, as the enterprise was found to be too small to attract the 
 attention of capitalists, a treaty with the Pottawatamie Indians 
 was made which secured an additional right, that of purchasing 
 at $1.25 per acre a tract of land which lay northwest of Topeka, 
 containing 550,000 acres more. This right, however, was never 
 
 parties at times had minor interests in the enterprise. Having once talien hold of the 
 task of building the road, these men stood by it to the fullest extent and put it through, 
 never disposing of the stock vphich came into their hands. The physical difficulties to 
 be overcome were much greater on the Central Pacific than on the Union Pacific — 
 heavier grades, long stretches of snow-sheds through the mountains, etc., being required. 
 As the Union Pacific profited by the unexpected finding of an easier route, so the Cen- 
 tral Pacific found an unexpected resource in Chinese cheap labor, without which the 
 road probably could not have been built. 
 
 The construction company device which was used by the Central Pacific people 
 was called the Contract and Finance Company, and was similar in organization to the 
 Credit Mobilier. The number of men concerned being smaller, and the system of 
 bookkeeping being even worse than the bad one employed by the Credit Mobilier, 
 the history of the construction period of the Central Pacific cannot be given. But at 
 any rate, the men who took the stupendous risks of that time got all the profits. 
 
 The same men who composed the Central Pacific Company also made up the 
 Southern Pacific Company. The road of the latter runs southeast from San Francisco 
 to New Orleans, and thence has one line of steamers to Florida and another to New 
 York. The real connection between the Central Pacific and the Southern Pacific is 
 very simple — identity of ownership. The nominal connection has been in various 
 deceptive forms. The Southern Pacific company is a Kentucky corporation, with ill- 
 defined and almost unlimited powers. Sometimes the Central Pacific has leased the 
 Southern Pacific line ; now the Southern Pacific holds a lease of the Central Pacific 
 line. Naturally it is to the interest of the owners of these systems to send Coast 
 traffic over the Southern Pacific in preference to sending it over the Central Pacific 
 and the Union Pacific, as they thus secure a longer haul. How the Union Pacific 
 tried to recoup itself for the traffic which was lost to it when the Southern Pacific line 
 was built, will appear later. 
 
 'H. V. and H. W. Poor, Manual of Railroads, 1877-78. 
 
40 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 exercised and these lands were subsequently sold for $i.oo per 
 acre to parties interested in the Santa Fe Company.^ The pro- 
 ject still being considered too insignificant, it was determined to 
 connect it with a Pacific railway scheme, and thus attract the 
 attention of the whole country. The parties interested, there- 
 fore, drew up and pushed in Congress one of the early Pacific 
 railway bills.'' 
 
 In 1863 the name of the company was changed from the 
 Leavenworth, Pawnee and Western to the Union Pacific (Eastern 
 Division). In May 1863, John C. Fremont and Samuel Hallett 
 began making a series of payments which in October amounted 
 to ^203,000 and gave them possession of the franchises and the 
 lands of the company. Of this latter asset there were supposed 
 to be over 2,000,000 acres. ' Under the early owners there had 
 been little or no construction. Under Fremont and Hallett a 
 contract was let to a Canadian firm, but no work was done under 
 it.t Its owners becoming estranged in 1864, the property was, 
 in December of that year, turned over to a new set of men, the 
 price being about the same sum that was paid at its previous 
 transfer. 5 Under this management the road was built. 
 
 The Eastern Division people, doubting that the Union Pacific 
 Company would ever build their road as originally planned, were 
 instrumental in having inserted in the Act of July 2, 1864, a 
 section^ which provided that, if the line from Omaha had not 
 been constructed when the Eastern Division reached the point 
 of the proposed junction at the one-hundredth meridian, the 
 latter might proceed to build westward on the proposed route 
 of the Union Pacific and. receive the subsidy for such building. 
 This fact is interesting when considered in connection with the 
 Act of July 3, 1866.7 In this is found evidence of a change in 
 plan. It allowed the Eastern Division to run west instead of 
 northwest, releasing it from the necessity of joining the Union 
 
 ^Pacific Railway Commission, p. 1673. 
 
 ^ Ibid., p. 1596. 5 Ibid., p. 3847. 
 
 ^ Ibid, p. 3846. ^Sec. 12, see page 113 below. 
 
 "> Ibid. 714 Statutes at Large, 79. 
 
HISTORY OF THE BRANCH ROADS. 4 1 
 
 Pacific at the one-hundredth meridian. Under this authority 
 the old route up the Republican fork of the Kaw was aban- 
 doned, and a new one following the Smoky Hill branch was 
 adopted, the point of divergence from the original route being 
 Fort Riley. It was undoubtedly the intention of the Eastern 
 Division people to extend their road southwest from Denver, 
 through New Mexico and Arizona and on to the southern part 
 of California. They would thus have had a competitor of the 
 Union Pacific, instead of a branch of it. This plan, however, 
 was frustrated by the insertion in the Act of 1866 of the unwel- 
 come provision that the Eastern Division must join the Union 
 Pacific at a point not more than fifty miles west of the meridian 
 of Denver. 
 
 The subsidy was claimed on the first completed section of 
 forty miles in October 1865. A year later 130 miles were 
 done; by the end of 1868 about 400 miles were ready for opera- 
 tion, and the fall of 1870 saw the line opened for traffic to 
 Denver.' ''-"^ 
 
 Meanwhile an Act of Congress of March 3, 1869,^ had 
 authorized the Eastern Division to contract with the Denver 
 Pacific Company for the building of the road from Denver to 
 Cheyenne, and there was transferred to that company the fran- 
 chise, land grant, and all other privileges for that part of the 
 road. On the same day both houses of Congress passed a 
 joint resolution allowmg the name to be changed from Union 
 Pacific (Eastern Division) to Kansas Pacific^ For the sake of 
 simplicity the road will be referred to hereafter by this name, 
 without regard to what may have been its legal title at the 
 time spoken of. 
 
 The Act of July 3, 1866, while it allowed the Kansas Pacific 
 to adopt a new route, provided that no more United States bonds 
 should be issued for it than would have accrued to it if it had 
 followed the original route. The distance necessary to effect 
 the proposed junction with the Union Pacific was determined to 
 
 'H. V. and H. W. Poor, Manual of Railroads, 1877-78. 
 
 ^ IS Statutes at Large, 324. 3 15 Statutes at Large, 348. 
 
42 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 be 393y| miles, and for so much only of the road were bonds 
 issued. This is important because the mortgage of the govern- 
 ment covers only those parts of the system which were built by 
 the aid of the bond subsidy. The land grant, however, extends 
 the whole length of both the Kansas Pacific and the Denver 
 Pacific lines. 
 
 The contracts for constructing the Kansas Pacific road were 
 let to several firms under whose various names a ring of the 
 stockholders, with perhaps slight variations of membership, 
 operated. R. M. Shoemaker and Co. had the contract for build- 
 ing the main line to the one hundred and fortieth milestone ; 
 Shoemaker, Miller and Co. for the remaining bond-subsidized 
 portion. On the day of making the first of these contracts 
 there was a payment to John D. Perry and Co. of gi, 136, 601.15 
 for the amount expended on the road. No contract with this com- 
 pany can be found, but as Perry and others who were interested 
 in this company were also interested in both the others, it may 
 perhaps properly be inferred that this company does not differ 
 widely in make-up from the other two. Unfortunately, the 
 books of these companies are not forthcoming, and therefore 
 details of the construction period are scanty. 
 
 The bookkeeping of the builders of the Union Pacific was 
 bad, but that of the builders of the Kansas Pacific was much 
 worse. While in the case of the former it was possible to give 
 not only the cost of the road to the railway company but also 
 its cost to the contractors who built it, in the case of the Kansas 
 Pacific only the cost to the Kansas Pacific Company can be given. 
 
 Under the contract of R. M. Shoemaker and Co.' the first 140 
 miles west of the Missouri River cost ^10,172,179.21, or ^72,- 
 658.42 per mile.^ Payment was made in capital stock and cash 
 in equal parts. 3 For the remainder of the bond-subsidized por- 
 tion, I. e., 253-^ miles, Shoemaker, Miller and Co. received $\6,- 
 232,812.62, or $61,225.90 per mile. The contract called for all 
 the United States bonds, i. e., $16,000 per mile ; all the first- 
 
 ' Pacific Railway Commission, p. 4864. 
 
 'Ibid., p. 4945. 'Ibid., p. 4865. 
 
HISTORY OF THE BRANCH ROADS. 43 
 
 mortgage bonds — an equal amount; $10,000 per mile in income 
 bonds ; and S8,ooo per mile in capital stock ; and in addition a 
 lump sum of $600,000 in capital stock and $400,000 in income 
 bonds. In consideration of these sums the construction com- 
 pany was not only bound to build the road, but it was also bound 
 to pay all the debts of the company unfunded at the time of the 
 termination of the contract. These were estimated at $450,000, 
 and $500,000 was set as the limit to such payment.' The 
 remaining portion of the road, upon which there was no bond 
 subsidy but simply a land subsidy, is 2.34 miles long, and is 
 known as the Denver Extension. Its cost was $7,952,498.83, or 
 $33,985.04 per mile. The total cost, then, of the 639.4^ miles 
 of road from Kansas City to Denver was $34,357,490.66. 
 
 The funds to pay the construction accounts came from the 
 sale of the following securities : stock, $10,000,000 ;3 first-mort- 
 gage bonds, $16,000 per mile for 393y4 miles, amounting to 
 $6,303,000;* the United States bonds which represented a 
 second mortgage on the same part of the road, also amounting 
 to $6,303,000 ; first-mortgage bonds on the Denver Extension, 
 $6,500,000 ;5 a mortgage upon the Leavenworth branch,^ $600,- 
 000;' an income mortgage of $4,186,000;^ and a land-grant 
 mortgage of $500,000.9 The total face value of these securities 
 was thus $34,392,000, or $34,509,34 more than the cost of the 
 road as given above. 
 
 The extravagant policy of the builders of the Kansas Pacific 
 kept the financial conduct of the enterprise unsatisfactory long 
 after the road was completed. In 1867 the net earnings of the 
 road were $190,571.56, but the interest on the bonded indebted- 
 ness which had already been contracted was $467,642.97. In 
 
 ' Pacific Railway Commission, pp. 4867-g. 
 
 " Ibid., p. 4440. ' Ibid., p. 119. 
 
 3 Ibid., p. 4923. i Ibid., p. 122. 
 
 'The short line of 31.6 miles connecting Leavenworth and Lawrence, upon 
 which no subsidy was given. — Ibid., p. 4902. 
 
 1 Pacific Railway Commission, p. 122. ^ Ibid., p. 4902. 
 
 'Issued in 1866 and canceled later. — Pacific Railway Commission, pp. 4907-491 1. 
 
44 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 1868 the net earnings were more than doubled, ^495, 230.61, 
 while the interest account had fallen to ^364,371.03. This was 
 the only year in the history of the road as an independent organ- 
 ization when the net earnings equaled the interest on the bonded 
 indebtedness. In 1869 the net earnings were ^437, 163.70, and 
 the interest ^497, 246. 77. In 1870 the interest account had 
 swelled to ^1,005,935.51, and instead of net earnings there was a 
 deficit of $790,689.21. This, it will be remembered, was the year 
 when the road was built through to its western terminus, Den- 
 ver. The result of this deficit was a land-grant mortgage ' for 
 $2, 000, 000.= During the next year there was some improvement, 
 but the net earnings of $264,033.87 were still far short of the 
 amount of the bonded interest, $1,055,358.70. A second mort- 
 gage was therefore issued on the land pledged the year before, 
 for the sum of $1,500,000.3 The following years showed no 
 improvement in the affairs of the company, and in l874'* another 
 small loan was raised on land security. In October 1876,' there 
 was issued a funding mortgage, covering the whole line,^ for 
 $1,500,000,' with 10 per cent, interest. A schedule of securities 
 was placed in the hands of the trustees of this mortgage, among 
 them a controlling interest in the stock of the Denver Pacific. 
 In 1873 there had been a default on its interest obligations by 
 the Kansas Pacific, and in November, 1876,* a bill of foreclosure 
 was filed. This put in jeopardy the control of the Denver 
 Pacific, a majority of its stock being in the hands of the trustees 
 of the funding mortgage of 1876. A large majority of the 
 bonds upon which there was default had been sold abroad, chiefly 
 at Amsterdam and Frankfort. The president of the Kansas 
 Pacific therefore went to Europe, called a meeting of the holders 
 of the various sorts of bonds, and showed them the necessity of 
 keeping the control of the Denver Pacific. The result was a 
 
 ^Pacific Railway Commission, p. 130. * Ibid., p. 130. 
 
 ''Ibid., p. 4431. 5 Ibid., p. 131. 
 
 ^ Ibid., p. 130. ^ Ibid., p. 4431. 
 
 ' This was to pay off the floating debt which had accumulated previous to the 
 receivership. — Pacific Railway Commission, p, 4895. 
 ^ Ibid., p. 135. 
 
HISTORY OF THE BRANCH ROADS. 4 5 
 
 funding agreement by which there were surrendered matured 
 coupons and some which were yet to mature, instead of which 
 there were received what were called Baby Bonds. In case of 
 default on these, the management of the road was to be surren- 
 dered to two receivers, one of whom should represent the bond- 
 holders, the other the junior securities — the railroad directors' 
 party.' 
 
 A new era in the badly entangled affairs of the Kansas 
 Pacific was about to begin, but before going on to that it may be 
 well to turn aside to consider briefly the Denver Pacific. This 
 was, as has been intimated, an appendage, and practically an 
 asset of the Kansas Pacific, and its affairs can be very quickly 
 disposed of. 
 
 The Act of March 3, 1869, referred to above, having freed 
 the Kansas Pacific from the necessity of building directly that 
 part of the line lying between Denver and Cheyenne, where it 
 was proposed to connect the Kansas Pacific line with the Union 
 Pacific, the construction of this link was placed in the hands of 
 an independent company. The most prominent man connected 
 with this, the Denver Pacific Company,'' was John Evans, at one 
 time governor of Colorado and long connected with railway 
 enterprises in the West. The details of the construction period 
 cannot be given, as those of the books which are not lost are in 
 a very fragmentary condition. At the completion of the road, 
 January i, 1871,3 the capitalization was S2, 500,000 in first-mort- 
 gage bonds and ;?4,ooo,ooo in stock.'* 
 
 The Denver Pacific was a separate corporation for ten years, 
 and for three only of the ten did the net earnings exceed the 
 interest on the bonded indebtedness. In 1878 there was default 
 on payment, and in April of that year the road went into the 
 
 ^ Pacific Railway Commission, p. 133. The scheme also provided for a temporary- 
 issue of securities, to the amount of j!5oo,ooo, the last of which were redeemed and 
 canceled in 1876. — Ibid., p. 4895. 
 
 = Incorporated in 1867 b'y the territorial legislature of Colorado. — Pacific Rail- 
 way Commission, p. 4951. 
 
 3H. V. and H. W. Poor, Manual of Railroads, 1887, p. 839. 
 
 ''Pacific Railway Commission, p. 4987. 
 
46 
 
 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 hands of receivers, where it remained until its separate existence 
 ceased.' 
 
 To return to the Kansas Pacific. It was early in 1878 that 
 Jay Gould first became interested in that enterprise, and he 
 straightway set about an attempt to do something which had 
 been talked about as early as 1875^ — harmonizing the manage- 
 ments of the Kansas Pacific and of the Union Pacific. The 
 hostility between the two roads had been detrimental to both. 
 In fact, the Kansas Pacific assigned as the cause of its bad 
 financial condition the refusal of the Union Pacific to prorate its 
 traffic westward from Cheyenne. The right to prorate was 
 claimed by the Kansas Pacific under the Act of 1862,3 which pro- 
 vided that the various Pacific roads should be operated as one 
 system. The reply of the Union Pacific sufficiently showed the 
 injustice of the demand, even if it did not meet the legal aspect 
 of the controversy. It was this : That the portion of the Union 
 Pacific lying west of Cheyenne was far more expensive, both as 
 to building and as to maintenance, than either the Kansas Pacific 
 or the line from Omaha to Cheyenne. It would be no more than 
 just, then, to charge more for hauling freight through the moun- 
 tains than for hauling it over the plains. But a wholly sufificient 
 cause for the financial misfortunes of the Kansas Pacific was 
 found in its too great capitalization. 
 
 " The financial history of the road is indicated by the following figures : 
 
 
 Receipts from 
 traffic 
 
 Traffic expend- 
 itures 
 
 Net earnings 
 
 Bonded Ind. (No 
 Gov't Subsidy) 
 
 1870 
 
 $304,738.23 
 
 339,i4S.4S 
 366,570.42 
 362,378.22 
 
 381,149.77 
 374,229.69 
 352,019.27 
 317,761.05 
 187,022.71 
 137,126.56 
 
 $197,518.42 
 242,015.98 
 169,191.95 
 146,565.29 
 138,303.69 
 139,246.00 
 246,852.94 
 186,644.90 
 
 137,829.3s 
 105,308.68 
 
 $107,219.81 
 
 97,129-47 
 
 197,378.47 
 
 215,812.93 
 
 242,846.08 
 
 234,983.69 
 
 105,116.33 
 
 131,116.15 
 
 49,193.36 
 
 31,817.88 
 
 $138,535-25 
 
 I87I 
 
 197,623.24 
 
 1872 
 
 197,432-52 
 
 1873 
 
 202,297.66 
 
 1874 
 
 187,335.22 
 
 1875 
 
 196,680.96 
 
 1876 
 
 188,353.96 
 
 1877 
 
 175,644.65 
 
 1878 
 
 
 1879 
 
 
 
 
 
 $3,122,141.37 
 
 $1,709,477.20 
 
 $1,412,664.17 
 
 $1,483,903-46 
 
 Pacific Railway Commission, pp. 4987, 4991 
 ' Pacific Railway Commission, f. 3,^0. 3 Sec. 12. See Appendix, p. 107. 
 
HISTORY OF THE BRANCH ROADS. 47 
 
 The plan by which Gould hoped to quiet the dissensions of 
 the two roads was embodied in the Kansas Pacific Pool Agree- 
 ment, signed April 24, 1878. By this agreement twelve large 
 holders of Kansas Pacific securities bound themselves to do 
 certain things ; viz., to unite in interest the Kansas Pacific and 
 the Union Pacific so that they should be operated as one road ; 
 to provide for the reorganization of the Kansas Pacific on a sound 
 basis ; to secure the payment of its bonds ; and to apportion the 
 new stock which should be issued, according to the holdings of 
 the various subscribers to the agreement. A schedule of rates 
 was fixed at which securities might be put into the pool, for 
 which securities the managers of the pool would issue certificates 
 to the owners.' 
 
 If this plan had been executed there would have resulted a 
 company with no lien on its property except the first mortgage 
 over its whole length, the government lien on part of it, and 
 $4,800,000 of stock. But to be successful it was necessary that 
 all the securities outstanding should come into the pool. If part 
 only were canceled, the rest would be thereby made more valu- 
 able. '■= In order, therefore, to attract outside holders, the pool 
 prices were made somewhat higher than the market rates. 3 But 
 still some holders of securities refused to come in, and it soon 
 became evident that the scheme would not work. 
 
 There was then perfected the plan of the consolidated mort- 
 gage which bears the date of May, i879.'' Its objects were to 
 get a "uniform security and to make a saving in interest.^ Of 
 
 •■Pacific Railway Commission, p. 162. At that time the funded debt of the Kansas 
 Pacific was ^27,727,350.00, most of it bearing 7 per cent, interest, some of it 6 per cent., 
 and some 10 per cent. The annual interest charge was 81,892,134.50. — Ibid., p. 496. 
 
 ^Pacific Railway Commission, p. 455' 
 
 3/*2V., p. 454. ■i/(5/(/., p. 455. 
 
 5 The exchange was made as follows : 
 
 Denver Pacific bonds at par jSi,6o5,ooo 
 
 Boulder Valley Railroad bonds, $438,000, for 436.000 
 
 Income bonds, stamped S2,907,45ofor82,070,43i.4i 
 
 " " unstamped 137,500" 118,314.86 
 
 $2,188,746.27 
 
48 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 these new bonds there were issued $8,457,000, retiring various 
 obligations with higher rates of interest. The good effect of the 
 Gould management was soon evident in the income of the com- 
 pany, and the harmony existing between the two roads which 
 had so long been hostile was so complete that it would seem that 
 any further unification of their interests was unnecessary, until 
 it is remembered that this harmony existed only so long as one 
 man willed it to exist. 
 
 There remains to be given the history of the least important 
 of the Pacific railways provided for in the Act of 1862 — the 
 Central Branch Union Pacific. Notwithstanding its lack of 
 importance, this road had perhaps the most picturesque experi- 
 ences of any of the group. 
 
 Chartered by an act of the territorial legislature of Kansas 
 which was approved February 11, 1859, under the title of the 
 Atchison and Pike's Peak Railroad Company, it secured, on Jan- 
 uary I, 1864, the rights granted by the Act of 1862 to the 
 Hannibal and St. Joseph. That is, it was allowed to build a road 
 westward from St. Joseph by way of Atchison to connect with 
 the Kansas Pacific, and to receive for not more than one hundred 
 miles of its length the same subsidies given to the other Pacific 
 railways. The name was changed to the Central Branch Union 
 Pacific on January i, 1867. 
 
 Brought forward, $2,188,746.27 
 
 Funding Mortgage bonds $1, 167,000 ^942,305.60 
 
 Second Mortgage, Land Grant bonds 1,005,000 827,103.60 
 
 First Mortgage, Land Grant bonds 8,000 8,000.00 
 
 Leavenworth Branch bonds 108,000 86,730.00 
 
 Solomon Road bonds 40,000 40,000.00 
 
 National Land Company stock 1,000 1,000.00 
 
 Arkansas Valley Railway bonds 454,000 323,883.60 
 
 «4,4I7,769.07 
 
 Less for fractions 1,769.07 
 
 ■ i?4i4 1 6,000 
 
 In settlement with Jay Gould, $2,000,000 at 75. . 1,500,000 
 
 For discount on Gould's $2,000,000 at 25 500,000 
 
 Total $8,457,000 
 
HISTORY OF THE BRANCH ROADS. 49 
 
 March 27, 1865, the company authorized the issue of gi,6oo,- 
 000 of first-mortgage bonds on its property and franchise, with 
 the intention of using the proceeds in construction. May 9 of 
 the same year a contract for building and equipping the road 
 was given to William Osborn,' who divided it into sixty-four parts 
 and assigned to various parties all but four of these parts. This 
 contract called for the payment of practically all the assets of 
 the road — an exhaustive contract.'' At a later date Osborn's 
 share was bought up and, the others consenting, the contract 
 was canceled. 
 
 From March 1866 on, the sale of bonds proceeded, and, 
 together with the sale of stock options, furnished the bulk of 
 the funds for building the road. The subsidy bonds for the 
 first completed section of twenty miles were issued August 2, 
 1866. Those for the fifth and last section were issued January 
 24, 1868.3 Although this last issue of bonds indicates that a 
 United States commissioner had, in January, 1868, examined 
 the last twenty miles of road and sworn that it fulfilled the 
 requirements of the law, it was not until September 8, 1868, 
 that the contractor wrote announcing the completion of the 
 road.'* 
 
 The books of the contractor show that the cost of the road 
 was as follows : 
 
 Construction $2,306,430.42 
 
 Equipment 243,924.52 
 
 $2,550,344,943 
 Subsequent bills for construction and equipment 181,002.29 
 
 $2,731,347-23 
 
 To meet this charge the funds were obtained as follows]: 
 
 For $1,600,000 United States bonds Si, 577.651. 5S 
 
 For stock options 392,225.53 
 
 For $1,600,000 first-mortgage bonds 567,612.14 
 
 $2,537,489.22 
 
 ^Pacific Railway Commission, p. 5303. ■^Ibid., p. 5303. 
 
 '/did., p. ^ogi. ■> Ibid., -p. $20^' 5 Note mistake in addition. 
 
50 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 Of this latter sum $491,612.14 was received in cash, and 
 ^76,000 in services and credits on accounts. There were 842 
 bonds disposed of without any clear account being rendered. 
 They are entered under the headings "compensation," "dona- 
 tion," "existing liabilities," etc' 
 
 When the Kansas Pacific turned westward from Fort Riley 
 to go to Denver, instead of to its proposed junction with the 
 Union Pacific at the one-hundredth meridian, the Central 
 Branch found its plans badly upset. It thus became a spur run- 
 ning out into the midst of the prairie, with no western connec- 
 tions. But sound lawyers said that the Act of July 3, 1866, 
 could not be construed so as to deprive the Central Branch of 
 its right, under the Act of 1864, to continue its road up the 
 old route of the Kansas Pacific to a junction with the Union 
 Pacific.^ Others would only go so far as to say that this action 
 of the Kansas Pacific which Congress had sanctioned gave the 
 Central Branch a strong equitable claim on Congress for reme- 
 dial legislation. Senator Fessenden, of Maine, who had up to 
 this time been an opponent of the Pacific railway subsidies, 
 recognized the force of this reasoning so that he approved the 
 action of the company in pressing its claim. A bill was intro- 
 duced to declare that the rights of the Central Branch were in 
 no way affected by the act allowing the Kansas Pacific to fol- 
 low the Smoky Hill fork of the Kaw. This was opposed by 
 the Kansas Pacific, and narrowly defeated in the Senate.^ 
 But the claim was pressed before the executive branch of the 
 government, and the company was finally allowed to file a map 
 for the extension of the road to a junction with the Union Pacific. 
 President Grant signed this map, and the matter seemed to be 
 settled. Later, however, certain men whose inspiration seems 
 to have been drawn from Wall street convinced the president 
 that his previous action in signing the map had been urged 
 upon him by those who wished to manipulate the stock market, 
 and, to avoid being used as the tool of speculators, he, in Janu- 
 
 ^ Pacific Railway Commission^ p. 5331. 
 
 ''Ibid., pp. 4144-6. ^ Ibid., p. 4093. 
 
HISTORY OF THE BRANCH ROADS. 5 I 
 
 ary 1873, sent to the Department of the Interior for the map 
 and tore off his signature.' It was attempted for several years 
 to get redress for this ill-advised action, but without success. 
 
 The Central Branch having lost the advantage which it was 
 expected would accrue to it through connection with the Pacific 
 railway system, the policy was developed of encouraging the 
 building of numerous short lines into the country lying west of 
 the subsidized portion, for the sake of developing local traffic.^ 
 
 In 1877 Oliver Ames began to take an active interest in the 
 affairs of the Central Branch. 3 He had inherited from his father, 
 Oakes Ames, 666 shares of stock and 27 bonds. In 1878 and 
 1879 he increased his holdings by purchases of stock at prices 
 varying from 50 or less up to 160. 
 
 In the fall of 1879 negotiations were begun for the sale of 
 the property to Jay Gould, who then controlled the Kansas 
 Pacific. Ames, having a strong financial circle back of him, was 
 pushing construction forward with the avowed intention of going 
 to Denver. Gould, who claimed this territory for the Kansas 
 Pacific, was building a parallel line so near to the Central Branch 
 that they at times disputed the right of way. At the same time 
 Ames was negotiating for a sale of his line to the Chicago, Bur- 
 lington and Quincy, was communicating with Garrison of the 
 Missouri Pacific, and had some talk with Palmer of the Chicago, 
 Rock Island and Pacific. He was offering his stock at $300 per 
 share. Finally he offered Gould five-eighths of the amount out- 
 standing, ;? 1, 000, 000, at S250, and the offer was accepted.'* 
 
 ^Pacific Railway Commission, p. 4096. 
 
 ' The first of these roads was the Waterville and Washington, 20.69 miles in 
 length, leased to the Central Branch December 15, 1876. The Republican Valley 
 Railroad followed just a year later. The Atchison, Solomon Valley and Denver 
 Railway was leased from August 20, 1878, and the Atchison, Republican Valley and 
 Pacific on January I, 1879. These roads, with the Atchison and Denver, were con- 
 solidated under the name of the Atchison, Colorado and Pacific Railroad, and Decem- 
 ber 27, 1879, were leased to the Central Branch for 25 years, the Central Branch 
 agreeing to pay an annual rental of ^1000 per mile and keep the roads in repair. On 
 the same day the Atchison, Jewell County and Western also was leased on the same 
 terms. 
 
 'i Pacific Railway Commission, p. 802. '■Ibid., p. 807. 
 
52 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 Straightway, November 7, 1879, the bargain was put on paper, 
 Gould agreeing to pay in equal amounts of Union Pacific collat- 
 eral trust bonds and of Kansas Pacific consolidated mortgage 
 bonds. On this day Ames owned but 2890 shares, and he had 
 agreed to deliver 6250 shares. November 11, 1879, Gould 
 agreed to take in addition lOOO shares at $200, and lOOO at ^175, 
 payment to be made in Kansas Pacific consols.' On the 19th of 
 the same month he gave Ames a thirty days' option to sell him 
 the remaining 1620 shares or any part thereof at Si 50.^ Between 
 November 11 and December 30, 1879, Ames turned over 6250 
 at ^250, 1000 shares at S200, and 366 at $175, receiving therefor 
 Si, 826, 500. Payment was made in Union Pacific 6's to the 
 amount of ^913,500, and in Kansas Pacific 6's to the amount of 
 S9 1 3,000.3 Ames also delivered to Gould a majority of the 
 stock of the Atchison, Colorado and Pacific, and of the Atchison, 
 Jewell County and Western — 8443 shares in all.* On January 
 24, 1880, Gould turned over this property to the Kansas Pacific, 
 receiving therefor just what he gave and in the same kind of 
 securities. 5 
 
 Thus this little road, 100 miles in length, during the few years 
 that it maintained a separate existence, went through various 
 phases of interesting railway experience. It was built for profit, 
 and run at a loss. It guaranteed the bonds of other roads, and 
 was in default on the interest of its own. It leased a system of 
 feeders with an aggregate mileage of more than twice its ow n 
 length. While continuing to pile up deficits, and never having 
 paid a dividend, its stock sold at 250 to the shrewdest railway 
 manipulator of the age. Then it was dropped into the treasury 
 of the Kansas Pacific, another road with a history made up of 
 financial failures, remained there a few hours, and at last lost its 
 identity by absorption into the reorganized Union Pacific Rail- 
 way system. 
 
 Having reviewed the history of the building of each of the com- 
 
 " Pacific Railway Commission, p. 808. 
 
 ' Ibid., p. S^b. 1 /«(/., p. 809. 
 
 j/i^zo'., p. 524. s/foV., p. 527. 
 
HISTORY OF THE BRANCH ROADS. 
 
 53 
 
 ponent parts of the Pacific railway system, it is now possible to 
 look at the group as a whole. The plan laid down in the charter 
 acts was shown by the map on page 14. It is interesting to com- 
 pare that plan with the system as built, calling to mind the forces 
 which effected the changes. The completed system is shown 
 in the accompanying map : 
 
 PACIFIC R. R. SYSTEM, AIDED PORTION AS BUILT. 
 
 To him who studies the construction of the first Pacific 
 railway in the light of present methods of railway building, the 
 men who put through this great enterprise seem immeasurably 
 extravagant if not corrupt. Those who suffered from their manip- 
 ulations of the leading railway properties of the West are 
 pretty sure to call them corrupt. But to him who looks at the 
 railway history of the country as a whole, the building of the first 
 railway to the Pacific appears as a mere episode, to be measured 
 by quite different standards. Such an one will, of course, regret 
 that extravagant and questionable methods were used, but he 
 will not visit upon the managers of this work unqualified con- 
 demnation, as so many have done. 
 
 The construction of the earliest American railways was car- 
 ried on with funds obtained by the sale of stock. Thus the con- 
 trol and the ownership of the roads were in the same hands, as 
 they ought to be. Later it became evident that unfinished roads 
 could be mortgaged to raise part of the funds for construction, 
 and this policy was used with increasing frequency. At last the 
 bonds were made to furnish almost the whole of the construction 
 fund, and the stock was given to the bondholders as a mere 
 
54 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 bonus. Property thus obtained was parted with readily, and it 
 was possible to buy cheaply the control of a road and manage it 
 as a speculation, to the detriment of the bondholders. This 
 practice of separating ownership and management was highly 
 unfortunate. A still worse development of railway policy came 
 about the same time — the use of the construction company. 
 This was in essence a limited liability corporation, formed by 
 stockholders or others to secure the profits of building a road 
 for the mortgage bondholders. The contracts for construction 
 were made exhaustive, i. e., all the possible resources of the road 
 were given to the builders for their work ; and the men who 
 furnished the money found their property hopelessly loaded 
 down with a debt upon which, in many cases, the interest could 
 not be paid. This necessitated a reorganization, or successive 
 reorganizations, in which investors suffered and speculators 
 thrived. 
 
 At this stage in the development of American railway policy 
 the government found itself in need of a railway to the Pacific. 
 How the road would be built, if built then, was patent to all. 
 The war was in progress, so the offer which was made was a war- 
 times price. The first offer, of 1862, was not taken up ; so a 
 second was made two years later, doubling the first, and was 
 accepted. It was a fair bargain, and the government got just 
 what it bargained for. The proper thing to regret is not that 
 this particular enterprise was carried through in an undesirable 
 way, but rather it should be regretted that the American p^ple 
 should ever have adopted such industrial methods. 
 
CHAPTER V. 
 INTERNAL HISTORY OF THE UNION PACIFIC, 1869-1895. 
 
 It has been seen that the stock of the Union Pacific was 
 accepted by the men who built the road as the source of a very- 
 uncertain profit on the. investment. Naturally it was from the 
 beginning a speculative stock, and even as early as 1869 ' the noto- 
 rious James Fisk made an unsuccessful attempt to control it. In 
 1 872 Horace F. Clark and his friends bought a controlling interest 
 at 30 or thereabouts, the plan being to throw the Union Pacific 
 traffic over the Vanderbilt roads — Clark being Comtnodore Van- 
 derbilt's son-in-law, and a director of the New York Central. 
 
 During the next year, at Clark's death, this stock was put on 
 the market, and it chanced that an order of Jay Gould's to his 
 brokers to buy what was offered at 35 or less, was given about 
 the same time." Gould thus came into possession of Clark's 
 stock. Soon after this the price was depressed to 14, and Gould, 
 in alarm, began to investigate. He found that there was an 
 immense floating debt, carried at high rates of interest ; ? 10, 000,- 
 000 of income bonds soon falling due ; and various other unsatis- 
 factory features of the situation. By giving to the task almost 
 his whole time and instituting much-needed reforms, Gould suc- 
 ceeded, within three years, in placing the road on a dividend- 
 paying basis,3 and during a period of less than five years there- 
 after the dividends paid amounted to $11,942,125.'* 
 
 This dividend-paying period was marred by the hostilities 
 with the Kansas Pacific referred to on page 46, which led to the 
 
 ' Credit Mobilier Investigation, p. 260. 
 
 
 
 ' Pacific Railway Commission, p. 446. 
 
 
 
 ^Ibid., p. 447. 
 
 
 
 '/iid.,p.4Slo: In 1875 3^ per cent. 
 
 In 1878 
 
 y}i per cent. 
 
 1876 8 per cent. 
 
 1879 
 
 6 per cent. 
 
 1877 8 per cent. 
 
 Jan. 1880 
 
 i}i per cent. 
 
 55 
 
 
 
56 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 talk of consolidating the two properties. This talk was signifi- 
 cant only as foreshadowing the unification of interests which 
 came a few years later. 
 
 Between 1873 and 1878 Gould increased his holding in Union 
 Pacific stock from about 100,000 shares to double that amount, 
 or five-ninths of the total issue.' During the next two years, 
 however, he sold largely, thus surrendering his absolute control 
 of the road. Attention has already been called to the fact that, 
 in 1878, Gould took hold of the Kansas Pacific property," and 
 quieted the quarrels with the Union Pacific over the prorating 
 of traffic. Gould's connection with the Central Branch has also 
 been related.^ The significance of all these things will appear 
 upon a study of the situation at the end of 1879. 
 
 Gould's sale of Union Pacific stock and his buying of Kansas 
 Pacific indicates his estimate of the relative value of the two 
 roads. The fact that the Union Pacific was a link in the only 
 rail route across the continent had assured to it at once a place 
 of importance in the commercial world and an immediate income. 
 The importance of the Kansas Pacific came later, and Gould 
 seems early to have recognized that importance. 
 
 By the summer of 1879 the physical condition of the Kansas 
 Pacific had, under Gould's management, been greatly improved. 
 The filling in of its territory with settlers had increased busi- 
 ness and permitted the spending of money for the betterment 
 of the property. During a recent trip abroad Gould had 
 observed with admiration the compact, non-competing railway 
 systems of England, and perhaps he was influenced by this to 
 desire the consolidation of the Union Pacific and the Kansas 
 Pacific* His chief interest was in the southern road, but the 
 men of the Union Pacific agreed with him perfectly in this wish. 
 Consolidation was therefore inevitable, and it would have come 
 sooner than it did but for the friction which arose over the rela- 
 tive values of the properties. The Union Pacific people combat- 
 ted strongly Gould's opinion that the Kansas Pacific stock was 
 
 ' Pacific Railway Commission, p. 451. ^ Page 51, above. 
 
 = Page 46, above. '•Pacific Railway Commission, p. 178. 
 
INTERNAL HISTORY OF THE UNION PACIFIC. 
 
 57 
 
 worth more per share than the stock of the Union Pacific' Gould 
 argued thus for his position : The Kansas Pacific is much less 
 heavily capitalized than the Union Pacific, and so has lighter fixed 
 charges ; it runs fifty miles further east, and so has a longer stretch 
 of agricultural country to draw from ; it lies 2000 feet lower than 
 the Union Pacific, and so is in less danger from snows ; its land- 
 grant is more valuable ; its terminals at both Kansas City and 
 Denver are very valuable.^ 
 
 On the other hand, the Union Pacific people pointed out the 
 much greater net earnings of their road and the large dividends 
 which had been paid by it. Neither the Kansas Pacific nor the 
 Denver Pacific had ever paid a dividend. 3 
 
 The reply to this is found in the comparatively small capital- 
 ization of the southern roads and in the fact that under Gould's 
 management they had been raised greatly in physical condition. 
 The filling in of the Kansas Pacific territory led Gould to pre- 
 dict that that road would soon outstrip the Union Pacific in earn- 
 ing capacity.* As an argument of another sort he showed how, 
 
 ^Pacific Railway Commission, p, 66o. 
 
 - Ibid., p. 897. 3 Jbid., p. 888. 
 
 ■• The merits of the case may be judged from the following figures : 
 
 
 Mileage 
 
 Capital 
 Stock 
 
 Funded Debt 
 
 Capitalization 
 
 Capitaliza- 
 tion per 
 Mile 
 
 Union Pacific . . . 
 
 1039 
 
 673 
 106 
 
 836,762,3005 
 10,000,000 
 
 4,000,000 
 
 878,508,350.65 
 
 30,567,282.78 
 
 581,000.00 
 
 8115,270,650.65 
 
 40,567,282.78 
 
 4,581,000.00 
 
 8110,870 
 60,278 
 43,216 
 
 Kansas Pacific. . . . 
 Denver Pacific .... 
 
 
 1823 
 
 850,762,300 
 
 8109,656,633.43 
 
 8160,418,933.43 
 
 
 
 Net Earnings 
 
 Net Earnings per Year 
 
 Net Earnings 
 per Mile 
 per Year 9 
 
 Union Pacific. . 
 Kansas Pacific. . 
 Denver Pacific. 
 
 {1867-80) * 864,020,833.56^ 
 (1867-S0) 1 8,220,217.60 
 (1870-79) ^ 1,412,664.17 
 
 (10 years) 85,835,713-37 
 ( 8 years) 1,077,988.45 
 (10 years) 141,266.42 
 
 85,616.66 
 1,601.77 
 1,332-70 
 
 5 Pacific Railway Commission, pp. 4832-3. 
 
 ' Ibid., p. 4802. ' Ibid., p. 4806. 
 
 ^ From Boston books. Those at Omaha give slightly different results. 
 
 ^Pacific Railway Commission, p. 4988. 
 
58 
 
 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 by an extension of its branches, the Kansas Pacific could seriously 
 cut into the Union Pacific traffic. 
 
 Although all that Gould said was acknowledged to be reason- 
 able enough, the Union Pacific party still held back, and this 
 irritated Gould. Finally he began a series of maneuvers which 
 quickly brought them to terms. How he bought the Central 
 Branch has already been told.^ This road, lying between the 
 Union Pacific and the Kansas Pacific, was bought for the joint 
 protection of the two properties, with an understanding between 
 Gould and the other directors that if consolidation was effected 
 this should be taken in.'' Commodore Garrison was at that time 
 extending the Missouri Pacific, which then consisted of a 
 scant 300 miles of road,^ into Kansas Pacific territory. Gould 
 threatened to build the Kansas Pacific as far east as Garrison 
 built the Missouri Pacific west. Stormy interviews ensued, and 
 finally Garrison suggested that the cheapest way to stop the fight 
 was for Gould to buy the Missouri Pacific.^ This proposal met 
 
 
 Interest per Mile 
 per Year 
 
 Dividends 
 
 1869 {i. e. 1875) 
 
 to 1880 
 
 Union Pacific 
 
 Kansas Pacific 
 
 Denver Pacific 
 
 S3.l85.39 
 2,294.71 
 1,749.89 
 
 $11,942,125 ■ 
 
 
 
 Comparison of Accounts for 1879.^ 
 
 Income. Union Pacific 
 
 Gross Earnings $12,983,155.74 
 
 Operating Expenses and Taxes 5>475i5°3.44 
 
 Surplus Earnings $ 7,507,652.30 
 
 Miscellaneous Income 436,889.84 
 
 Total Income $ 7,944,542.14 
 
 Expenditures. 
 
 Other than Dividends $5,386,891.81 
 
 Dividends 2,204,700.00 
 
 Kansas Pacific 
 
 $4,839,188.42 
 
 2,881,689.32 
 
 $1,957,499-10 
 
 $1,957,499.10 
 $1,654,464-69 
 
 Total . 
 
 ' Pacific Railway Commission, p. 
 "Ibid., p. 897. 
 3 Page 51, above. 
 
 ■ .. $7,591,591-81 $1,654,464-69 
 
 •■Pacific Railway Commission, p. 661. 
 ilbid., p. 506. 
 ^ Ibid., p. 509. 
 
INTERNAL HISTORY OF THE UNION PACIFIC. 59 
 
 Gould's favor, and November 13, 1879,' the bargain was struck, 
 ;^3,ooo,ooo being paid for 4000 shares of stock — ^750 per 
 share. '^ 
 
 Having bought the Central Branch to protect both the 
 Union Pacific and the Kansas Pacific, and the Missouri Pacific to 
 protect the latter, Gould announced his next move. Since the 
 Union Pacific lay north of the richest mineral belt and the 
 Southern Pacific south of it, there was a place for a road between 
 them. Gould proposed to furnish this road. The Missouri 
 Pacific and the Kansas Pacific being operated harmoniously, it 
 was only necessary to build westward from Denver through the 
 Loveland Pass to Ogden, where the Central Pacific could be 
 joined, in order both to tap the mineral belt and also to secure 
 the shortest route across the continent.^ This would have ruined 
 the Union Pacific,'' and the Union Pacific people knew it. There 
 was panic in their camp. Frequent interviews with Gould were 
 held, and it was urged upon him that he had already committed V, 
 himself to the previously planned consolidation. Although 
 Gould had the matter entirely in his own hands, s he acknowl- 
 edged the force of this statement, and at last consented to con- 
 solidation on the terms which he had originally offered. The 
 first of the papers necessary to the carrying out of this bargain 
 was drawn up January 14, 1880; the final articles of consolida- 
 tion were signed January 24, 1880.^ 
 
 This consolidation merged into one new company what had 
 previously been three separate companies — the Union Pacific, 
 the Kansas Pacific, and the Denver Pacific. The name adopted 
 was the Union Pacific Railway Company, to distinguish it from / 
 the old Union Pacific Railroad Company. The amount of the 
 capital stock was fixed at $50, 762, 300, ? the sum of the capital 
 stocks of the three constituent companies. This new stock was 
 issued dollar for dollar of the old. 
 
 ^Pacific Railway Commission, p. 506. ••Ibid., p. 509. 
 
 'Jbid., p. 529. ilbid., p. 558. 
 
 'ilbid., p. 505. 'For text see Jbid., p. 668. 
 
 ?See note 4 on p. 57 above. In 1881 this was raised to $60,868,500. Pacific 
 Railway Commission, p. 885. 
 
60 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 The new Union Pacific stock immediately became worth more 
 than the old had been. As the Denver Pacific stock had been 
 practically worthless except as controlling the Kansas Pacific 
 traffic, and as the Kansas Pacific stock had stood considerably 
 lower in the market than eVen the old Union Pacific stock, this 
 move put money into the pockets of the holders of all three of 
 these stocks. Among this number were several of the directors 
 of the Union Pacific, but they all, except Gould, held much 
 more of the stock of the Union Pacific — which rose least — than 
 of the other kinds. It might be supposed that Gould was the 
 one most anxious for consolidation. The contrary, however, is 
 the truth. It was the Union Pacific people who did all the urg- 
 ing for consolidation, and Gould who simply acquiesced.' 
 
 The reorganization of 1880 and the consequent economies 
 were highly beneficial to all the properties concerned. The 
 great genuine prosperity of the old Union Pacific Company was 
 bequeathed to the new company in the shape of an apparent but 
 not real continuing prosperity. During the years immediately 
 following the consolidation, railway construction was active in 
 the West. Gould foresaw the inevitable result of increased com- 
 petition on the Union Pacific, and, while allowing a large floating 
 debt to accumulate and while continuing the payment of divi- 
 dends, he quietly unloaded his stock in small parcels all over the 
 country. The effect of his dividend-paying policy was evident — he 
 had succeeded in convincing the public that the Union Pacific 
 had become an investment stock instead of a speculative one.' 
 
 ' Union Pacific directors held stock as follows : 
 
 Kansas Pacific Union Pacific 
 
 Jay Gould $4,000,000 ;J2,700,000 
 
 F. Gordon Dexter .. . 125,700 637,600 
 
 E.H.Baker 27,400 1,000,000 
 
 Russell Sage 443,000 1,470,000 
 
 Elisha Atkins 45,600 293,700 
 
 Frederick L. Ames. . . 179,600 3,861,200 
 
 Sidney Dillon 305,900 
 
 Pacific Railway Commission, pp. 463, 700, 745, 393, 754, 687, 201, 702, 74S, 393, 
 754, 687. 
 
 »In 1884 only one-fifth of the stock was held in Wall street. — Report of Govern- 
 ment Directors, 
 
INTERNAL HISTORY OF THE UNION PACIFIC. 6 1 
 
 About the year 1883 there came very serious changes in the 
 railway situation in the trans-Missouri territory. The Atchison, 
 Topeka and Santa Fe had the year before connected with the 
 Southern Pacific, and its competition began to be felt.' The 
 Northern Pacific was completed and claimed its share of the 
 Montana and northern Coast trade. The Denver and Rio 
 Grande reached Ogden, and divided the Salt Lake trafific. The 
 Southern Pacific affected the business with San Francisco and 
 the southern part of California. The Horn silver mines ceased 
 to produce,'' and their profitable freight was- lost. Altogether, 
 these things, within a year, made a difference to the Union Pacific 
 Railway Company of several millions of dollars.^ 
 
 When Gould succeeded in stepping from under his load of 
 Union Pacific securities and the ownership of the road changed 
 hands, there came a. change in the management of the road. In 
 1884 Charles Francis Adams became president. He found him- 
 self in command of a road whose builders had over-capitalized 
 it and whose subsequent owners had trickishly weighted it down 
 with further debts while its earning capacities were being 
 impaired. Adams stopped the payment of dividends and set 
 to work on the hopeless task of staying the road on its descent 
 toward bankruptcy.* 
 
 ' Pacific Railway Commission, p. 3346. 
 
 ''Ibid., p. 68. 
 
 ^Ibid., p. 85. 
 
 In 1886 the transcontinental traffic was divided with six competitors, and consti- 
 tuted but 7^ per cent, of the whole traffic of the Union Pacific. — Report of Gov- 
 ernment Directors. 
 
 * Connected with this taking of the presidency of the Union Pacific by Adams is 
 a letter of his, the equal of which could not be found if all the annals of the railway 
 industry were searched. It was called out by a letter signed "Investigator" in the 
 Boston Advertiser oi December 18, 1882, in which the question was raised what it is 
 that determines the market value of railway stocks. Adams's letter is given in full 
 below : 
 
 To the Editors of the Boston Advertiser : — I notice what Investigator says in 
 his communication of yesterday in your financial columns on the matter of the present 
 price of Union Pacific stock. He speaks of " Wall Street values," and the " intrinsic 
 worth " of the stock as " an investment." I should like to say something on this 
 point, as it seems to me of more importance just now than at first appears. 
 
62 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 On one important feature of railway policy Gould and 
 Adams were entirely agreed. Both recognized the absolute 
 necessity of building up a system of branch roads which should 
 feed the main trunk with trafific. The roads which compete 
 with the Union Pacific are of course under the same necessities, 
 and whenever one of these roads has to build a branch, either 
 to secure valuable trafific or to keep a competitor from intruding 
 into territory naturally its own, the branch is built and the cap- 
 italization of the parent road is increased to pay for it. This mode 
 of procedure is impossible with the Union Pacific. Its charter 
 is a particularly narrow one, and provides for the consolidation 
 of only those roads which were mentioned in the charter. The 
 Union Pacific must therefore adopt a more roundabout method 
 of procedure. The branches of that road are controlled by the 
 possession of a majority of the stock, which allows the Union 
 Pacific people to vote a lease of the branch to the parent road, 
 the terms usually being a guarantee of the interest on the bonded 
 indebtedness. 
 
 Some years ago, in 1878, I think, I was a government director of the Union 
 Pacific. As such I had to make a thorough investigation of the property and report 
 upon it. I was then so much impressed with the value of the road as an investment, 
 that when I shortly after resigned, as agent of certain persons and adviser of others, 
 I was instrumental in some heavy purchases of the stock. They were made at figures 
 not materially different from those now ruling, and as an investment have resulted 
 well. Some months ago when the present depression began to affect the price of the 
 stock, I thought it would be well to again look pretty carefully into its value. Accord- 
 ingly I did so, passing two whole weeks in October, going carefully over the whole line 
 in company with its officers, studying its system of feeders, informing myself as to its 
 policy, and generally having every source of information freely opened to me. There 
 could be no question as to the greatly improved condition of the property between 
 my examination in 1878 and my present examination. There could be equally little 
 question as to the development of the country or of the business of the road. 
 
 Returning East thoroughly satisfied on these points, I went to New York. I found 
 a veritable panic prevailing in respect to the stock. It had fallen fifteen points and 
 was still going down. Everyone I saw was a " bear " upon it, and I was assured it 
 was going to 75' So full was the air of all sorts of "bear" stories of enormous float- 
 ing debts, falsified earnings and over-issues of stock, that when I came to Boston I 
 went at once to the office of the Company, there to complete my inquiries. I did not 
 go to the treasurer, but as Mr. F. L. Ames is a friend of mine of long and intimate 
 standing, I went to him and told him what I wanted to find out. He at once laid 
 before me the private reports for the Committee of Directors bearing on these points. 
 
INTERNAL HISTORY OF THE UNION PACIFIC. 63 
 
 This spending of money on branches has given rise to one of 
 the commonest accusations against the Union Pacific ; namely, 
 that it diverts its funds from the treasury of the main line, where 
 the United States could claim a share of them as payments on 
 the debt of the road to the government, to the treasuries of the 
 branches, where the government has no rights. If it is wise for 
 the Union Pacific to build branches, this is unjust, and it would 
 seem that no student of the railway situation in the West, where 
 every road is forced by the fierce competition for traffic to 
 extend its lines, could doubt the wisdom of this course. It 
 would seem that the United States as a large creditor would 
 gladly see the Union Pacific Company spend its earnings in the 
 betterment of the property, rather than that there should be paid 
 on the debt of the government 5, or 25, or even 50 per cent, of 
 
 and told me to satisfy myself. I had before me all that he had to show. If I wanted 
 anything more the original books were at my service. 
 
 The result of my inquiries has been a curious insight, not into the weak spots of 
 the Union Pacific road — these I will say at once have escaped me — the insight has 
 been in the ways and operations of Wall street. I have studied the several steps in 
 one grand organized raid of a successful "bear" campaign. Had I time to follow it 
 out I could make it an account of no little interest. I could show the thorough knowl- 
 edge the Wall Street operators had of the way the stock was held, and how they 
 based their plans upon this knowledge, so as " to shake the weak stock out." Unlike 
 many other companies, the Union Pacific, with its 600,000 shares, was in no one's 
 keeping. A great deal of the stock was floating about or carried on margin. There 
 was a grand chance for a " bear " campaign and the bears knew it. The stock list 
 shows how skillfully, how persistently, and how boldly they availed themselves of it- 
 A list of the charges set afloat and of the reports successively day by day telegraphed 
 over the country, especially to New England, during the last ten weeks, would be a 
 curiosity. 
 
 Meanwhile, the point I wish to make is this : The whole result of my investiga- 
 tions, which have been as thorough as I knew how to make them, has satisfied me of 
 the investment value of this property. Believing in it, and having led others to 
 invest in it, I want to see the control of it in New England. The Chicago, Burling- 
 ton and Quincy and the Union Pacific constitute together the Broadway or Washing- 
 ton street of this continent. They will always be the chief commercial thoroughfare 
 between Chicago and San Francisco. Other lines will be built through to the north 
 and to the south of them ; but these will be to the Union Pacific only what Third or 
 Sixth avenues are to Broadway. At least that is the way it strikes me. Seeing it in this 
 light, the Union Pacific seems to me a very valuable property, with a very great future. 
 So far as occupying the country is concerned, the policy the Company is pursuing is 
 a thoroughly sound one. Its surplus earnings have for years been invested and are 
 
64 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 those net earnings ; for the ultimate payment of the debt depends 
 on the earning capacity of the system, and on nothing else. 
 
 Fortunately, there is no uncertainty as to whether the branch 
 lines are, or are not, valuable to the Union Pacific system. 
 Charles Francis Adams, who came to the problem of managing 
 the property rather with the training of the student than with 
 that of the practical railway manager, caused the accounts for 
 the year 1886 to be so kept that the income due to the branch 
 lines could be separated from the rest. He found that on an 
 investment in branch lines of S4 5, 000, 000, the actual profit to the 
 ■ mainline on business which they gave it was S4, 952, 000, or 10.95 
 per cent.' The question surely needs no further discussion. 
 
 A minor feature of the question of branch roads has given 
 rise to another accusation against the Union Pacific- — that it 
 has diverted funds from its own treasury to the treasuries of its 
 branches, to avoid the payment of the proper percentage to the 
 government, by means of the "constructive mileage" device.^ 
 
 now being invested in feeders. Under these circumstances an opportunity of securing 
 the control of the property in New England is now offered. It is but necessary to 
 quietly take the stock at the price at which the Wall Street bears offer it. It has 
 already been drifting to Boston in considerable quantities. The object of my present 
 writing is, in so far as I can, to cause it to drift here faster. I am, etc., 
 
 Boston, December 18, 1882. C. F. Adams, Jr. 
 
 (Boston Advertiser of December 19, 1882.) 
 
 A few days after this remarkable exhibition of naivete, the New York Indicator 
 commented as follows : 
 
 " The discoveries made by Mr. A'dams in the methods of Wall Street for making 
 and unmaking stock values may be new to him, but they are very old to those who 
 have been diligent students within its classic shades — and paid dearly for their tuition. 
 If he has been a close student he has learned that large earnings, valuable property, 
 judicious management, a, general state of prosperity, with superior future prospects,, 
 go no further in making up stock values than the machinations of a ring of Wall- 
 street operators who have the money at their command to sustain a scheme for mak- 
 ing a fictitious market, and that intrinsic worth is not always the base of stock values." 
 
 But the New England public, unlike the Indicator, put faith in Adams's discover- 
 ies, and many investments were made on the strength of his letter. The result was 
 of course disastrous. Adams then felt called upon to take hold of the property and 
 make good the things he had said of it. Hence his election in 1884. 
 
 ^ Pacific Hallway Commission, pp. 616-17. 
 
 2 When two roads co-operate in hauling freight, the sum received for the service 
 may be divided in proportion to the distance hauled by each — " prorated " ; or the 
 
INTERNAL HISTORY OF THE UNION PACIFIC. 65 
 
 Any difference in the compensation for services where two roads 
 co-operate in hauling the freight must be justified by showing 
 either that the road receiving the advantage renders a more valu- 
 able service than the other, or that it renders the same service at 
 a greater cost to itself. When one of these things has been 
 shown, it is simply a question of expediency whether the division 
 be on the basis of the "rate prorate," the "arbitrary," or "con- 
 structive mileage." 
 
 Let us look at the matter as it pertains to the Union Pacific 
 in a concrete case. Suppose a spur loo miles in length to leave 
 the Union Pacific 500 miles west of Omaha. Its traffic will be 
 gathered up at the way stations and turned over to the main line 
 largely in car-load lots, which will be hauled continuously 500 
 miles. This sort of traffic is the most profitable which comes to 
 a railway, and if it could not be obtained otherwise it would be 
 a good investment for the Union Pacific to prorate it and pay 
 the deficits on the branch road's interest accounts. But there is 
 a better way of dealing with the problem. It is evident that 
 some advantage in the division of the money is due to the branch 
 for these reasons : The terminal charges are as heavy on the 
 spur as on the main line, and therefore, because of the difference 
 in the lengths of the hauls, they constitute a much larger per- 
 centage of the whole cost of the service. Since the hauling 
 capacity of a spur is always much less fully utilized than that 
 of the main line, the actual cost of the hauling part of the 
 service would be more per mile on the spur than on the main 
 trunk, for as the traffic increases the cost per ton -mile decreases. 
 If, then, one -sixth of the freight charges is givento the spur, 
 it is evident that it is not getting its deserts, for it has been 
 shown that the spur renders the costlier service. The Union 
 Pacific management recognizes this fact, and makes constructive- 
 mileage arrangements with the branch roads. This is a practice 
 
 total charge may be divided in proportion to the local charges on the two roads — the 
 "rate prorate ; " or, however large or small the total charge may be, one road may get 
 a certain fixed sum — the " arbitrary ; " or one road maybe given an advantage by 
 having each mile of its haul counted as more than a mile, — one and one-half, two, or 
 three miles, — after which the division is prorata. This last is "constructive mileage." 
 
66 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 which has long been used in all parts of the country, and 
 approved by all students of railway practice. 
 
 The policy of building feeders was adopted as early as 1877, 
 but the great expenditures did not come until after 1880. Dur- 
 ing the prosperous years when 12 or 14 per cent, was being 
 earned, half of it, or several millions of dollars each year, was 
 put into the property. 
 
 The most important of the branch lines built in this way 
 is the Oregon Short Line. This company was incorporated in 
 1 88 1, and has a line running from Moxa, Wyoming, a station 
 180 miles east of Ogden, northwest to Huntington, Oregon, 
 where it connects with the line of the Oregon Railway and Nav- 
 igation Company. This extends from Huntington to Portland, 
 whence steamers run north to the cities of Puget Sound and 
 south to San Francisco. The Union Pacific owns about five- 
 ninths of the stock of the Oregon Short Line, and the Oregon 
 Short Line owns a controlling interest in the stock of the Oregon 
 Railway and Navigation Company. 
 
 This line was projected because the Central Pacific had 
 begun to divert its traffic from the Union Pacific and send it over 
 the Southern Pacific route, which made an independent connec- 
 tion with the coast seem desirable. The Northern Pacific Com- 
 pany had been provided for by an Act of Congress of July 2, 
 1864,' — the same day as the passage of the act which made 
 possible the building of the more southern group of the Pacific 
 railways, — but after seventeen years its line was still incomplete 
 and seemed likely to remain so. Therefore, in 1881, this Oregon 
 Short Line enterprise was started. But Henry Villard suddenly 
 appeared in the field, and the Northern Pacific had completed its 
 line even before the Oregon Short Line was built. Thus the 
 traffic which it was expected would follow one route had to be 
 divided between two. This system, although it is an annual • 
 charge upon the Union Pacific treasury for guaranteed interest, is 
 very valuable because of the business which it brings to the parent- 
 road. 
 
 ' 13 Statutes at Large, 365. 
 
INTERNAL HISTORY OF THE UNION PACIFIC. 6/ 
 
 During the first three years of his administration, Adams 
 put gi6,ooo,ooo into the Union Pacific property, half of it coming 
 from net earnings and half from the sale of securities.' But he 
 was in a losing fight, and later the debt piled up in spite of 
 him. In 1890 money had to be had, and no one but Gould 
 would furnish it. Adams therefore stepped out, and the second 
 Gould regime began. 
 
 A change in management, however, could not save the road. 
 Competition has been carried so far in the railway world that 
 the rates now in effect do not afford a fund for insurance against 
 unexpected misfortunes, and the bad season of 1893 brought to 
 the Union Pacific its legitimate effect and threw it into the hands 
 of receivers. Some roads, not so heavily handicapped as to 
 interest charges, escaped with the cutting down or the annihila- 
 tion of dividends. For the Union Pacific there was no hope, and 
 now, instead of being a strong moving factor in the industrial 
 world, it is an inert mass of assets, held together to protect the 
 creditor until a reorganization can be effected. 
 
 ^Pacific Railway Commission, p. 85. 
 
CHAPTER VI. 
 PUBLIC OPINION, LEGISLATION, LITIGATION. 
 
 A brief outline of the history of the Pacific railway project 
 has now been given. It remains to fill in that outline with several 
 sets of facts which have purposely been kept in the back- 
 ground heretofore in order that each of the topics to which they 
 relate might be treated as a complete whole and in its proper 
 relations.- This chapter is to be devoted to three such sets of 
 facts which are so intertwined that it seems inadvisable to 
 separate them, — the changes in public opinion, legislation, and 
 litigation. 
 
 The Pacific railways, being from their origin and from the 
 nature of their charters much more nearly public institutions 
 than other American railways, have been particularly sensitive to 
 the fluctuations of public opinion. Concerning this group, there- 
 fore, much more than concerning any other of our railways, 
 public opinion has crystallized into legislation. From this fact, 
 in turn, sprmgs one of the most unfortunate features of the 
 Pacific railway problem, — the constant necessity of taking these 
 laws which govern the relations between the creditor-government, 
 and its creature, the road, into court for interpretation. These 
 suits, even when brought in the most friendly spirit, — the courts 
 being the only places where these differences of opinion as to 
 interpretation can be settled,- — give an air of antagonism between 
 the roads and the government. 
 
 How the desire for a Pacific railway spread from individuals 
 to'i communities, from communities to whole states, and how the 
 states, speaking through their legislatures, forced the considera- 
 tion of the project upon Congress, has been briefly noted. ' In 
 
 s Chapter i. 
 
 68 
 
PUBLIC OPINION, LEGISLATION, LITIGATION. 69 
 
 order to a full understanding of the problem of the Pacific rail- 
 ways it is necessary also to note the trend of public opinion at 
 various later times, those at which important legislation was had. 
 This is not for the sake of interpreting those laws, for the courts 
 properly look only to the contents of the laws themselves for 
 that. It is for the sake of getting a proper point of view for the 
 determination of what shall be the course of future legislation. 
 Passing over, then, the early agitation,' it is necessary to know 
 what men thought of the Pacific railway when the Act of 1862 
 was under discussion. 
 
 The terms of the Act of 1862 show that a majority of the 
 members of the Thirty-seventh Congress thought that the Pacific 
 railway would be a financial success. There was, however, a 
 number by no means small who thought just the 'opposite.^ 
 
 ' In the discussions which were had over the rather crude propositions of the 
 period before the war, there appear all sorts of reasons for and against the project, 
 every variety of opinion as to the powers and duties of the government, all grades of 
 knowledge and of ignorance of the matter in hand, much of far- sighted patriotism, 
 and unfortunately much of its lack. The first arguments for a road were, as has been^ 
 said, commercial, and only secondarily political. These were strong enough to induce ( 
 a vigorous agitation very early — long before the Oregon question had been settled. At 
 the close of the Mexican War, when our Pacific coast line was more than doubled, these i 
 commercial arguments got added strength. With the discovery of gold in California | 
 and the consequent great immigration from the eastern states to the coast, the demands 
 for a road grew still stronger. 
 
 ' Mr. Lane of Kansas : " I am one of the senators who believe that this road, when 
 completed, will be one of the great paying thoroughfares of the world ..." 
 
 Mr. Clark of New Hampshire : " That only shows how we differ. The senator 
 from Kansas thinks it will be a good paying road. 1 believe that if the good God 
 were to make that road for you, right through, you could not form a company in the 
 country today that would run it without failure. . . . Whether I am right or not, I do 
 not build the road because I think it is to be a paying road ; I build it as a political 
 necessity, to bind the country together and to hold it together, and I do not care 
 whether it is to pay or not ; here is the money of the government to build it." — Thirty- 
 seventh Congress, second session, p. 2788. 
 
 Mr. Morrill of Vermont : " I am not to be deceived by any promises that this road 
 is to be built and run by any party but the United States. Every dollar that it takes 
 to construct the road is to be contributed by the United States. There is not a cap- 
 italist who will invest a dollar in it if he is to be responsible for its construction for 
 any considerable distance. . . . As a commercial or economical question, such a road 
 is utterly defenseless ; but as a national question, it has great merits, which in due time 
 will be recognized." — Thirty-seventh Congress, second session, p. 1708. 
 
70 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 Others, while acknowledging that the road was unlikely to pay 
 for itself directly, — t. e., to repay the debt, — thought that it 
 would indirectly prove a good investment by the saving which 
 it would effect on the expenses of carrying the mails, on the bills 
 of the army, and in other ways.' In support of this position 
 they pointed to the excessive charges for carrying the mails by 
 stage and pony express, the methods then in use, upon which a 
 large saving could surely be made as soon as a road was built.° But 
 
 Mr. Wilson of Massachusetts : " I have studied the railroad system of this country, 
 and its conditions, and I make the prediction here today, and let it go upon the record, 
 that the man is not born in this country who will ever see this nation get back this 
 money. It is an impossibility. The road will never be worth it." — Thirty-seventh 
 Congress, second session, p. 2757. 
 
 Mr. White of Indiana : " Now, sir, I contend that, although this bill provides for 
 the repayment of the money advanced by the government, it is not expected that a 
 cent of the money will ever be repaid. ... I undertake to say that not a cent of these 
 advances will ever be repaid, nor do I think it desirable that they should be repaid. 
 This road is to be the highway of the nation. ... I think, therefore, that this will turn 
 out a mere bonus to the Pacific railroad, as it ought to be." — Thirty-seventh Congress, 
 second session, p. 1891. 
 
 Mr. Wilson of Massachusetts : " I have little confidence in the estimates made by 
 Senators or Members of the House of Representatives as to the great profits that are to 
 be made, and the immense business that is to be done by the road. I give no grudg- 
 ing vote in giving away either money or land. I would sink ? 100,000, 000 to build the 
 road, and do it most cheerfully, and think I had done a great thing for my country if 
 I could bring it about. What are seventy-five or one hundred millions in opening a 
 railroad across the central regions of this country that shall connect the people of the 
 Pacific and Atlantic, and bind us together ? Nothing." — Thirty-seventh Congress 
 second session, p. 2754. 
 
 ' Mr. Wilson of Massachusetts : " Sir, I repeat what I have before said, that in 
 'voting for this bill and this appropriation of jSl 16,000,000, I vote with the conviction 
 that this sum of money is to go for the general interests of the country, and that we 
 never can expect it back in the treasury. If the interest on these bonds, from the time 
 the road commences, forever, can be paid by the services the road renders the 
 country, it is as much certainly as I can expect. I vote for the road with that expecta- 
 tion and that understanding." — Thirty-sixth Congress, second session, p. 615. 
 
 Mr. Wilson of Massachusetts : " I vote for the bill with the expectation that all 
 we get out of the road — and I think that it is a great deal — will be the mail carrying 
 and the carrying of munitions of war, and such things as the government may need, 
 and I vote for il most cheerfully with that view." — Thirty-seventh Congress, second 
 session, p. 2757. 
 
 = Question. Have you any recollection, Mr. Dey, by which you .can state what the 
 prevailing rate of wagon transportation was from the Missouri River to the west ? 
 
PUBLIC OPINION, LEGISLATION, LITIGATION. 7 1 
 
 this item was insignificant when compared with the expense for 
 Indian fighting armies. The great plains were the breeding 
 grounds of almost interminable Indian wars, and it was argued 
 that the railway furnished the only possible solution of the vexing 
 Indian problem. When troops could be rapidly and surely trans- 
 ported from one post to another, a much smaller force would be 
 adequate for policing the Indian country, and it was argued that 
 the saving on army bills would equal the interest on the debt 
 which the government would have to assume to secure a road.' 
 
 Answer. Yes, sir. Q. If you can, please state it. A. To supply my parties I paid 
 from 16 to 20 cents a pound for freight from the Missouri River to points on the Black 
 Hills, north of Denver. I paid 25 cents a pound for the rations to support my men 
 out to Fort Saunders, and I paid 30 cents for freight that I sent to Salt Lake to supply 
 my men. I might have paid a little more than the average price, but I think not. I 
 loaded my teams with all the supplies that they could manage to carry, and then I left 
 supplies at various points that were accessible to them when they were making their 
 surveys. About 30 cents a pound to Salt Lake was as low as I have heard of its 
 being done. Q. That was in what year ? ^. 1863 and 1864. Q. How was transporta- 
 tion conducted? A. By teams — cattle, mules, and horses. — Testimony of Peter A. 
 Dey before the Pacific Railway Commission of 1887. — Pacific Railway Commission, 
 p. 1430. 
 
 ' In response to a resolution of the House, Secretary of War Stanton presented a 
 table showing the amounts paid by the Quartermaster General during the fiscal years 
 1857-1861 for the transportation, between the Mississippi River and the Pacific Ocean, 
 of troops and supplies. The sums were : 
 
 1857 ^2,101,367. 31 i860 82,160,588.27 
 
 1858 3,961,848.40 1861 1,503.799-09 
 
 1859 4,319,550.95 
 
 ^14,047,154.02 
 
 The Secretary stated that these figures did not cover all the freightage paid, and, 
 by reference to other sources of information, the additional sums were found to be, in 
 1858,84,000,000; in 1859, 83,000,000 ; in 1860,81,500,000; in 1 86 1, not ascertained ; 
 for 1862, estimated, at least 86,000,000. Thus it was estimated that the annual bill for"^ 
 army transportation would be nearly 86,000,000, and that the postal service would cost 
 81,500,000 more. Adding the sums paid out for transportation of naval supplies, the 
 sum would be over 87,000,000 per annum. 
 
 These facts were presented in a speech by Mr. Campbell of Pennsylvania. — 
 Thirty-seventh Congress, second session, pp. 1578-9. 
 
 Mr. Latham of California : "Official reports and other authoritative data show\ 
 that the average annual cost, even in times of peace, in transportation of troops, with , 
 munitions of war, subsistence and quartermaster's supplies, may be set down in round/ 
 numbers at 87,300,000. The interest upon the credit loan of 865,000,000 of bonds 
 will be annually 83,900,000, leaving a net excess of 83,400,000 over the present cost." — 
 Thirty-seventh Congress, second session, pp. 2676-7. 
 
72 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 Although these arguments touching the purse were potent 
 enough to make it certain that a road would eventually be built, 
 reasons of quite another sort induced the taking up of the task 
 at the particular time when it was taken up — a time than which 
 none more unfavorable could have been chosen. The decisive 
 arguments were political. The struggle of 1850 to determine 
 whether California should be slave or free territory was not for- 
 gotten, and with the outbreak of the war there arose the danger 
 /'that the large southern element would again come to the surface 
 and succeed in throwing the influence of the state on the side of 
 the South. This could be prevented by railway connection with 
 the free states. 
 
 Still more important than this menace from within was one 
 from without. There was good evidence that if the Trent affair 
 had ended in open rupture between the United States and England, 
 the British fleet on the Pacific would immediately have struck at 
 San Francisco, and, in the then isolated position of the coast, 
 nothing could have prevented the success of such an assault.' 
 
 These, then, were the reasons for the enactment of the Act 
 of 1862. It was a war measure, put through when the nation 
 was in imminent danger of disruption, and as such it should be 
 judged. This is a fact which is too often lost sight of. 
 
 During the next two years there came no changes in the 
 state of affairs to lessen the demand for a road. It was still con- 
 sidered a national necessity. The costliness of railway building 
 and the high prices consequent on the war kept capitalists from 
 taking hold of the enterprise.' On the other hand, the lavish 
 expenditures of the government made necessary by the war pro- 
 duced in the minds of many congressmen a feeling that immense 
 expenditures were the natural and legitimate thing, and the gen- 
 
 ' Mr. Sargent, of California : " I know the fact to be that during the pendency of 
 the Trent difficulty warning was sent by an eminent Californian, then in England, that 
 orders had gone out to the British Pacific fleet to strike at San Francisco as soon as 
 news arrived of the commencement of hostilities." — Thirty-seventh Congress, second 
 session, p. 1595. Although it has since proved that this was a false alarm, it was 
 temporarily a potent factor in the case. 
 
 " See page 17, above. 
 
PUBLIC OPINION, LEGISLATION, LITIGATION. 73 
 
 erosity to the Pacific railways is but one evidence among many 
 of this feeling. 
 
 The call for a railway to the Pacific continuing strong and 
 unmistakable, the Act of 1864 was passed. This move was 
 approved by the country at large, and the men who undertook 
 the building of the road were almost universally applauded. The 
 rising tide of approval seems to have left its high-water mark in 
 a resolution passed by the House of Representatives December 
 13, 1865, directing the Committee on the Pacific railroad to 
 inquire what further legislation was necessary to expedite the 
 building of the road.^ 
 
 When the war came to an end, the expenditures of the gov- 
 ernment settled back somewhat from their abnormal level, By 
 the end of 1868 there began to be a closer inspection of all kinds 
 of appropriations, and April 5, 1869, — five weeks before the 
 Union Pacific and the Central Pacific met at Promontory Point, — 
 there was raised in Congress the first warning voice against the 
 Credit Mobilier as a corrupt concern.^ Although from this time on 
 frequent accusations along the same line were made in the legis- 
 lative halls, the country at large did not take up the cry until 
 considerably later. 
 
 Four days after this first arraignment of the Credit Mobilier, 
 on the 9th of April, 1869, congressional distrust of the man- 
 agement of the Pacific railways was still further evinced by the 
 passage of a joint resolution calling for the appointment of a 
 commission "of eminent citizens" to examine the roads of the 
 Union Pacific and the Central Pacific companies for the sake of 
 ascertaining whether they fulfilled the requirements of law, and 
 also to learn what further expenditures were needed to make 
 them first-class roads.3 In August the President appointed five 
 men to constitute this commission, and its report was given Octo- 
 ber 30, 1 869. This specified the improvements which were needed, 
 
 ' Thirty-ninth Congress, first session, p. 49. 
 ' Forty-first Congress, first session, pp. 503-4. 
 
 3 Forty-first Congress, first session, pp. 677, 703-4. Resolution approved April 10, 
 1869. — 16 Statutes at Large, 56. 
 
74 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 and estimated the necessary expense at $1,586,100 for the Union 
 Pacific, and $4, 493, 380' for the Central Pacific. Subsequently 
 another commission was appointed to see if the requisite improve- 
 ments had been made. This reported, October, 1874, that the 
 Union Pacific had spent $3,596,075.79, and the Central Pacific 
 $5,121,037.23, instead of the sums required.'' 
 
 The proper representatives of the government, commission- 
 ers appointed for that purpose, had from time to time examined 
 the completed sections of the Pacific railways, and sworn that 
 they fulfilled the requirements of the charter acts. The last sec- 
 tions were accepted thus, July 15, 1869.3 The action of April 9 
 and 10, however, expressed the doubt of the government as to 
 the reliability of the reports received up to that time and called 
 for a re-examination of the whole road."* Consistent with this 
 later action, the Secretary of the Interior gave an order Novem- 
 ber 3, 1869, to the Commissioner of the General Land Ofilice to 
 withhold the patents for one-half of the lands then ready to be 
 given to the Union Pacific, on the ground that the road was not 
 yet completed. 5 This order was continued in force five years, its 
 withdrawal being consequent on the report of a commission 
 appointed May 1874, reporting during the following November, 
 that the road had been completed according to law, October i, 
 1874.^ According to the official utterances of the government 
 this was the last time that the road was completed ! 
 
 As the subsidy of the Pacific railways consisted of United 
 States bonds, the interest thereon was, of course, demandable of 
 the United States treasury. The question whether the govern- 
 ment could demand from the companies the current repayment 
 of this interest was raised by a requisition for such interest made 
 
 ' Report on the Pacific Railroad, May 14, 1869, p. 25. 
 
 ^ Ibid., p. II. 4 See page 73 above. 
 
 -i Pacific Railway Commission, pp. 4255-6. s pg u. S. 416. 
 
 'A further evidence of the distrust of the government is found in ig Statutes at 
 Large, 169. The sum of ;?10,000 was appropriated to re-survey the roads, on the 
 supposition that the subsidy had been paid for more road than existed. By this 
 re-survey the Union Pacific was shown to be 1,247 rniles, and the Central Pacific, 951 
 miles longer than reported. — Ex. Docs., Forty-fourth Congress, second session, No. 
 38, p. 9- 
 
PUBLIC OPINION, LEGISLATION, LITIGATION. 75 
 
 September 3, 1870. The Act of 1862 said that the principal of 
 the bonds and the interest thereon should be a debt of the compa- 
 nies, for securing the payment of which the government should, 
 have a mortgage on the bond-aided portions of the roads, not 
 specifying different dates for the maturity of the two parts of the 
 debt. While the Act of 1862 was being framed, attention was 
 called to the fact that the payment of interest was postponed 
 until the maturity of the principal, and an insertion was proposed 
 to change this. But Congress consciously, intentionally, and., 
 definitely refused to require the companies to pay the interest 
 as it fell due.' The companies therefore refused to comply witK 
 the demand. The Attorney General upheld the position of the 
 Treasury Department and asserted the further right to withhold 
 payment for all services rendered by the roads to the govern- 
 ment. This was done. The matter then came up in Congress, 
 and an act was passed approving the action of the companies and 
 directing the Secretary of the Treasury to pay in cash the one- 
 half compensation due according to the provisions of the law.^ 
 Two years later, however, Congress directed the withholding of 
 this compensation for services, at the same time providing that 
 the companies might sue for the amounts involved in the Court 
 of CIaims.3 Advantage of this privilege was taken, and the court 
 decreed that the government must pay the sums which it was 
 holding back. Not a great while after this decision had been 
 affirmed by the supreme court of the United States,'' a new law 
 was framed which altered materially the status of the roads. 
 Consideration of that, however, must be postponed for the pres- 
 ent. 
 
 While the whole country was clamoring for the completion 
 of the Pacific railway, there seemed to be no thought that the 
 Credit Mobilier, which was supposed to be playing a large part 
 in pushing forward the Union Pacific enterprise, was anything 
 
 'Thirty-seventh Congress, second session, p. 1911. 
 
 = 16 Statutes at Large, 525, sec. 9. 99 U. S. 72 also decided that the interest was 
 due from the companies at the maturity of the principal, not as it accrued. 
 
 3 17 Statutes at Large, 508, sec. 2. ■• 99 U. S. 72. 
 
■^^ HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 but a highly commendable concern. But when success was 
 assured and profits were in sight, there began to arise murmurs 
 of disapproval. The American company with the foreign name 
 borrowed bad repute from the Credit Mobilier of France. 
 
 The unfavorable allusions in Congress, which began in April 
 1869, were made chiefly by men who but poorly understood the 
 connection between the Union Pacific and the Credit Mobilier. 
 Their condemnatory opinions, however, gradually permeated the 
 public mind. Then came the presidential campaign of 1872, 
 when everything which could be made to furnish political capital 
 was eagerly seized upon, and naturally the Credit Mobilier did 
 not escape notice. Charges of corruption connected therewith 
 were made agajnst prominent politicians so late that lack of time 
 rendered adequate explanations impossible. If explanations 
 could not be given, the only, alternative, politically speaking, 
 was denial of all connection with the concern. Such denials 
 were made, and they carried with them necessarily an arraign- 
 ment of the Credit Mobilier as corrupt. The reactionary feeling 
 against the prodigal expenditures and loose methods of the war 
 period, when constitutional provisions were construed in the 
 broadest manner possible and the ordinary rules of business 
 , morality gave way before the startlingly new conditions, was wide- 
 spread. Add to this the extravagant statements of the cam- 
 paign, and an investigation of the Credit Mobilier was inevitable. 
 Individual congressmen whose names had been connected with 
 it demanded vindication ; others thought they saw a chance to 
 blacken their opponents ; none dared to vote against the pro- 
 posed movement lest they thereby compromise themselves. 
 
 The House of Representatives, therefore, passed a resolution 
 December 2, 1872, providing for a committee of five "to investi- 
 gate whether any member of this House was bribed by Oakes 
 Ames, or any other person or corporation, in any matter touch- 
 ing his legislative duty."' This committee, the Poland Com- 
 mittee, began its work December 12, 1872, and took its last 
 testimony February 19, 1873.^ Under a resolution of January 6, 
 
 'Forty-second Congress, third session, p. ii. 'See p. 19 above. 
 
PUBLIC OPINION, LEGISLATION, LITIGATION. IJ 
 
 1873, a second committee of the House, the Wilson Committee, 
 was given the task of investigating the connection between the 
 Credit Mobilier and the Union Pacific. Its first sitting was held 
 January 10, 1873, and it likewise heard its last testimony 
 February 19, 1873.^ 
 
 The testimony elicited by the Poland Committee showed that 
 Oakes Ames was an extremely unsystematic business man, care- 
 less as to details. The discrepancies between his scanty records 
 and those of the men with whom he dealt were easily made to 
 appear to hide dishonesty. He was also shown to be a man who 
 was very unlikely to hide his meaning in phrases intentionally 
 ambiguous. But his careless expressions were of just the sort 
 which could most easily be made to appear full of evil meaning. 
 He gave the committee in their attempt to get to the bottom of 
 the matter every possible assistance, except when by holding 
 back it seemed to him possible to shield another. As to his own 
 asserted guilt he was perfectly open. Other congressmen who 
 were implicated testified with equal candor, and those who made 
 any attempts at concealment only hurt themselves thereby. 
 
 It appears from the Poland Committee investigations that 
 Oakes Ames, after he began to take an interest in the Union 
 Pacific enterprise, tried to connect influential men with it. To 
 that end he tried to get men of means both in and out of Con- 
 gress to take shares in the Credit Mobilier. In order that a lack 
 of ready money might not deter them from investing, he agreed 
 with some of his friends to hold stock for them without any ; 
 payment in hand. Others he guaranteed against loss, as Durant 
 had done when securing Union Pacific stock subscriptions. The 
 record of these transactions Ames kept in a small memorandum 
 book which he carried in his pocket. It is not strange that dis- 
 agreements should arise over the terms of contracts thus recorded. 
 Before the letting of the Ames contract numerous promises of 
 Credit Mobilier stock at par had been made. Later, when success 
 seemed in sight, many came to Ames for stock which they said 
 had been promised them, for now it had suddenly acquired a 
 
 'See p. 17 above. 
 
78 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 high value. It was selling this stock previously promised, at the 
 rate agreed upon — par, — which constituted Ames's offense. 
 Doubtless he found it advisable to sell, and did sell. Credit 
 Mobilier stock where definite bargains had not been made. He 
 certainly wanted the Union Pacific to have friends in Congress. 
 But there was no legislation then pending, there was none pro" 
 posed, there was none wanted. 
 
 The Poland Committee said in its report: "In his negotia- 
 tions with these members of Congress Mr. Ames made no sug- 
 gestion that he desired to secure their favorable influence in 
 Congress in favor of the railroad company."' "The committee 
 have not been able to find that any of these members of Con- 
 gress have been affected in their official action in consequence 
 of their interest in Credit Mobilier stock." ^ "The committee 
 do not find that either of the above-named gentlemen, in con- 
 tracting with Mr. Ames, had any corrupt motive or purpose him- 
 self, or was aware that Mr. Ames had any. "3 "The committee 
 find nothing in the conduct or motives of either of these mem- 
 bers, in taking this stock, that calls for any recommendation by 
 the committee of the house."'' 
 
 The report of the committee then proceeded to quote the 
 statute against bribery, and asserted that Oakes Ames had laid 
 himself liable to its penalties. It therefore recommended his 
 expulsion from Congress — for a transaction which constituted 
 bribery, but in which only one party was in any way guilty. 
 
 Mr. James Brooks, a member from New York, was asserted 
 by the committee to have procured certain shares of Credit 
 Mobilier stock which were meant to influence his action as a 
 member of Congress and as a government director of the Union 
 Pacific, he knowing that they were meant thus to influence his 
 action. The recommendation was for his expulsion likewise. 
 The testimony does not seem fully to establish the charge against 
 Brooks. 
 
 Anticipating the attack which would be made on these 
 
 'P. viii. 3P. ix. 
 
 " p. viii. * P. X. 
 
PUBLIC OPINION, LEGISLATION, LITIGATION. 79 
 
 recommendations, the committee gave up a considerable section of 
 their report to a defense of their right to deal thus with Ames 
 and Brooks. The Judiciary Committee of the House, to which 
 the testimony taken by the Poland Committee was referred 
 "with instructions to inquire whether anything in such testimony 
 warrants articles of impeachment of any ofiScer of the United 
 States not a member of this House," gave a report in which it 
 was made very evident that the House had no jurisdiction in the 
 case at all, the alleged offenses having been committed before 
 the existence of the then House." This may in part account for 
 the fact that the House, instead of expelling Ames and Brooks, 
 censured them. But if it had a right to censure, it had an 
 equally good one to expel. Be that as it may, within a few 
 months both Ames and Brooks had carried their loads of dis- 
 grace into the grave — a fact of no importance in the case, but one 
 which accentuates the poetic injustice of the whole proceeding. 
 
 The Wilson Committee was appointed because the public 
 believed that immense profits had been made by the builders of 
 the Union Pacific and disposed of improperly through the Credit 
 Mobilier. It investigated thoroughly, but, like the Poland Com- 
 mittee, with preconceived notions always in mind. Both com- 
 mittees took testimony so voluminous that neither the members 
 of Congress nor the newspaper men nor the ordinary student of 
 current affairs could hope to digest it. That the committees 
 themselves did not digest it is shown by various statements 
 incorporated into their reports which the testimony does not 
 bear out at all. The country demanded condemnatory reports 
 from the committees, and it got them. The widespread jobbery 
 of the war period had to be denounced, and the Credit Mobilier 
 case presented the occasion for such a denunciation. It was an 
 evidence of a change of attitude by the public, of an aroused 
 public conscience. If the spirit of reform had not taken this 
 mode of expression it would have found some other. 
 
 The work of the Credit Mobilier was complete when it had 
 carried out its first and last contract for building the Union 
 
 'Forty-second Congress, third session, p. 1651. 
 
80 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 Pacific road from Omaha to the one-hundredth meridian. Bu 
 its capacity for causing trouble was far from being filled at that 
 juncture. Careful business methods were not a part of the 
 equipment of the projectors of the Union Pacific, and when the 
 great work was done there was no settling up of accounts. A 
 claim was therefore made by the Credit Mobilier that certain 
 large sums of money were still due to it from the Union Pacific, 
 and this claim was not settled until Jay Gould came into control 
 of the road. He thought that the holders of the Credit Mobilier 
 stock ought to turn their shares into the hands of the Union 
 Pacific, thus carrying the claim back into the Union Pacific 
 treasury. Some agreed to do this if the rest would follow their 
 example, but the solution could not be effected thus. A com- 
 mittee was finally appointed to adjust a settlement between the 
 two organizations. The Union Pacific contention was that the 
 contract with the Credit Mobilier had been an illegal one, and 
 that therefore a refunding of the profits thereon could be called 
 for. By balancing these claims against one another, an agree- 
 ment was come to whereby mutual releases were given, and the 
 Credit Mobilier at last ceased to be a disturbing element. 
 
 After the Credit Mobilier investigations, the next important 
 evidence of popular distrust of the Pacific railways and ani- 
 mosity toward them was the Thurman Act, which became a law 
 May 7, 1878.' 
 
 The Act of 1862 had provided that 5 per cent, of the net 
 earnings of the roads should be applied toward liquidating the 
 debts to the government. It had also provided that the whole 
 sum earned by the roads for transporting government supplies, 
 mails, etc., should be applied to the same use. Among the 
 various changes made by the Act of 1864 for the sake of mak- 
 ing easier the requirements laid on the roads was one that pro- 
 vided for the application of only one-half the sums earned for 
 government transportation to the debt and the payment by the 
 government to the roads of the other half in cash. 
 
 ' statutes at Large, 56. 
 
PUBLIC OPINION, LEGISLATION, LITIGATION. 8 I 
 
 The Thurman Act dealt with both these provisions. As there 
 had arisen disputes over what constituted net earnings, — which 
 suits had been decided by the courts against the contention of the 
 government, — net earnings were defined to be the sum which 
 was left after subtracting from the gross earnings the sums 
 necessary for operating the road and keeping it in repair, and 
 the sum paid for interest oh the first-mortgage bonds. 
 
 Next it was provided that the whole of the compensation 
 due for government services should be withheld from the roads, 
 half of it being applied on the debt to the government and half 
 being paid into a sinking-fund. The sums paid into this sinking- 
 fund were to be invested by the Secretary of the Treasury in , 
 United States bonds, preferably those bearing 5 per cent. ^' 
 interest, and the interest was to be reinvested in like manner. 
 -Thus the sinking-fund was to earn compound interest." 
 
 It was provided that other sums should be paid into the sink- 
 ing-fund beside those for services. The Union Pacific was 
 required to pay annually $850, 000, or so much thereof as, when 
 added to the half-sum due for government transportation and the 
 5 per cent, of net earnings required by the Act of 1862, should 
 
 ■ Why this fund should be invested in United States bonds, instead of in Union 
 Pacific first-mortgage bonds — a lien prior to that of the government, — it is hard to 
 say. Such investment was finally permitted by an Act of March 3, 1887 (24 Statutes 
 at Large, 488). That this was not meant for a concession to the roads is very evi- 
 dent from the tone of the whole law, which is one more evidence, among many, of the 
 continued distrust which Congress felt toward the Pacific railways. 
 
 Section 5 of this law said : " That whenever it shall be made satisfactorily to 
 appear to the Secretary of the Treasury, by either of said companies, that 
 seventy five per centum of its net earnings as hereinbefore defined, for any cur- 
 rent year, are or were insufficient to pay the interest for such year upon the obliga- 
 tions of such company, in respect of which obligations there may exist a lien para- 
 mount to that of the United States, and that such interest has been paid out of 
 such net earnings, said Secretary is hereby authorized, and it is made his duty, to 
 remit for such current year so much of the 25 per centum of net earnings required 
 to be paid into the sinking-fund, as aforesaid, as may have been thus applied and 
 used in the payment of interest aforesaid." 
 
 It is not quite clear what Congress meant by enacting this clause. Earlier in the 
 statute it was provided that the interest on the first-mortgage bonds should be one of 
 the deductions from gross earnings before it was determined what were the net earn- 
 ings. Thus there could never be any call to pay this interest out of net earnings. 
 
82 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 equal 25 per cent, of the whole net earnings. That is to 
 say, the Union Pacific would pay into the sinking-fund in a very 
 prosperous year (i) one-half the sum due from the government 
 for services, (2) 5 per cent, of its net earnings, and (3) 
 $850,000. In a poor year it would pay (i) one-half the sum 
 due for services to the government, a moderately constant sum; 
 (2) 5 percent, of a smaller amount of net earnings; and (3) a 
 part of $850,000, or, if (i) equaled 20 per cent, of the net 
 earnings, none of it. Thus there were two upper limits prescribed 
 for the payments into the sinking-fund. 
 
 The provision for payments by the Central Pacific were the 
 ■same except that the sum $850,000 was increased to $1,200,000. 
 The remainder of the Pacific railways were omitted from the 
 provisions of the act. 
 
 This sinking-fund was to be applied to the payment of the 
 ' first-mortgage bonds at their maturity and, if anything remained 
 thereafter, to the liquidation of the subordinate liens. 
 
 To a mind untrained in legal subtleties it would seem that 
 the Thurman Act was an encroachment by the government as 
 sovereign lawmaker upon the rights of the railway company, for 
 the sake of protecting the government in its role as creditor. It 
 is therefore not strange that the railway companies refused to 
 accept it without testing its constitutionality in the courts. The 
 supreme court, in the natural course of events, passed upon the 
 question and declared the Thurman Act to be constitutional. 
 
 ' Sinking-Fund Cases, 99 U. S. 732. 
 
 This decision, however, was given by the vote of but five of the nine members of 
 the Court. Justice Hunt, on account of illness, took no part in the decision ; and 
 Justices Field, Bradley and Strong dissented from the decision of the Court. 
 
 Justice Bradley in his dissenting opinion (99 U. S. 744). said : "That it is a 
 plain and flat violation of the contract there can be no reasonable doubt." 
 
 Justice Strong, in his dissenting opinion, said : "What, then, was the contract 
 when it was made ? The government lent its bonds, and, in consideration of 
 the loan, each company assumed five obligations: 1st, to pay the bonds at their 
 m aturity, that is, at the expiration of thirty years ; 2d, to keep the railroad and telegraph 
 line in repair and use ; 3d, to furnish transmission of dispatches and transportation 
 for the government at reasonable rates, allowing it a preference for such purposes ; 4th, 
 to apply to the payment of the bonds and interest half the compensation due to it from 
 the government for services rendered, until the whole amount of the loan is fully paid ; 
 
PUBLIC OPINION, LEGISLATION, LITIGATION. 83 
 
 But this law, even if constitutional, is open to criticism on 
 Other grounds : in its practical workings it has been a marked 
 failure.' For this there are two chief reasons : the great falling 
 off of earnings, due to increased competition for western trafific ; 
 and the failure of the sinking-fund to earn 5 per cent, com- 
 pound interest.' A. very ordinary degree of foresight would have 
 predicted the former, and a slight knowledge of the bond market 
 would have shown that the latter was a surety. The mistake of 
 Congress in 1878 was in framing the Thurman Act without regard 
 to the future, to meet conditions which were already passing away. 
 
 and, 5th, after the completion of the railroad, to apply to the payment of the bonds at 
 least five per centum annually of its net earnings. The lender required and the 
 borrower undertook nothing more (p. 732). 
 
 " Now, what has been attempted by the act of May 7, 1878 ? The act was passed 
 with sole reference to this contract, and all its provisions have in view the imposition of 
 additional obligations upon the railroad company. It does not purport to be a repeal 
 of the charter. Its leading purpose is to take control of the property of the debtor, and 
 sequester it for the security of a debt which, by the terms of the contract, is not due 
 and payable for years to come (p. 734). 
 
 " Now, where is the power of Congress to add new terms to any contract made with 
 the United States, or made between any two private individuals ? Where is the power 
 to annul vested rights ? It is certainly not to be found in the Constitution (p. 736). 
 
 "' Congress may at any time alter, amend, or repeal this act.' The power thus 
 reserved is one over the act itself, not over anything that may have lawfully been done 
 under the act, before its repeal or alteration. It is only by great confusion of things 
 essentially distinct that this power can be construed as applicable to a contract made 
 after the corporation came into existence. Besides, the act of 1878 does not attempt 
 to repeal, alter or amend the acts of 1862 and 1864. It changes no franchise granted 
 by those acts, nor does it interfere with its exercise. It interferes only with the fruits 
 of the franchise. The right to possess and enjoy the income of the company is not a 
 franchise. It is an incident of the ownership of the company's property, though the 
 property may be accumulated by the use of the franchise" (p. 740). 
 
 ' The Thurman Act sinking-fund, planned to grow fast enough to make sure of 
 the payment at maturity of the whole debt to the government, stood thus for the Union 
 Pacific Railroad Company at the designated dates : 
 
 December 31, 1890, gi 1,105,492.53 
 
 " " 1891, 12,274,125.19 
 
 " 1892, 13,714,541.50 
 
 " 1893, 15,103,838.93 
 
 Thus the average annual increase for these years isSi,332,782.l7, while the annual 
 interest on the subsidy bonds is gl, 635, 190.72. 
 
 "The United States 5 per cent, bonds were at such a premium that the invest- 
 ment in them yielded but 2 per cent. — Pacific Railway Commission, p. 989. 
 
84 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 In 1887 came a piece of congressional legislation which was 
 in one way important. Provision was made for the appointment 
 of a commission of three who should investigate fully the affairs 
 of the bond-aided railways.' The voluminous testimony taken 
 by this commission makes it possible, by the expenditure of a 
 sufficient amount of energy, to get a thorough understanding ot^ 
 the affairs of the Pacific railways. The commission, with its 
 report, handed in recommendations as to legislation,' but it did 
 not, as seemed to be hoped, succeed in finding a basis for a set- 
 tlement of the differences between the roads and the government 
 which would commend itself to Congress. 
 
 Of late years no marked changes have taken place in the 
 condition of public opinion. Each session of Congress sees the 
 introduction of measures which evince the same old vindictive 
 feeling toward the Pacific railways, but which bring a settlement 
 of the debts no nearer. 
 
 ' 24 Statutes at Large, 488. 
 
 "Fiftieth Congress, first session, Executive Document No. 5/. Nine volumes. 
 
 ■k^^ v.U^^\,j^ M.^Jii>r W^ v^A -*\^ ^^-'' '^*-'\ ^ ^' 
 
 
CHAPTER VII. 
 FINANCIAL HISTORY OF THE UNION PACIFIC. 
 
 In this chapter it is proposed to make a study of the financial 
 history of the Union Pacific system, treating chiefly the years 
 since 1880. This inquiry falls naturally into two parts : first, an 
 examination of the income accounts of the company ; and, second, 
 an examination of the uses made of the funds collected. The 
 figures concerning the income will show how the road has treated 
 the communities through which it runs and to serve which it was 
 built. By studying the distribution of those funds it will appear 
 whether or not the men whose money built the road and those 
 who later became holders of its securities were justly dealt with. 
 
 The first thing to be considered is the income as a whole, 
 and its division between operating expenses and net earnings. 
 Chart' I presents these facts for the Union Pacific Railroad Com- 
 pany, whose line ran from Omaha to Ogden. The period covered 
 is from 18 70 to 1879 inclusive. The total shaded portion rep- 
 resents gross earnings ; the lower darker portion represents oper- 
 
 ' It must be borne in mind in studying the charts which are made use of in explain- 
 ing the financial history of the enterprise that facts of various and widely different 
 sorts are thrown together on the same page. Some of these facts can be compared ; 
 others are wholly different, and no basis of comparison exists. For instance, 
 areas representing gross earnings, operating expenses, and net earnings can be 
 compared, for they are of the same sort. On the other hand, while a line repre- 
 sents the fluctuations of freight rates, and a line represents the fluctuations of 
 passenger rates, and while both, by distance above the base line, represent the amount 
 charged per ton-mile or per passenger-mile, still no comparison can be made between 
 them. This is true for this reason : The units made use of, the ton-mile and the pas- 
 senger-mile, are wholly incomparable things. Yet each of these lines is valuable as 
 affording a basis for the comparison of rates of one sort in one year with rates of the 
 same sort in another year. The charts will, it is hoped, if too much is not expected of 
 them, be a considerable aid to an understanding of the facts of the financial history of 
 the road. 
 
 85 
 
86 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 ating expenses ; leaving the upper, lighter portion for net earn 
 ings — that portion of the income out of which should be paid 
 the interest on the bonded indebtedness, and, if this leaves any 
 margin, dividends on the capital stock. 
 
 From an inspection of this chart it will be seen that in 1870 
 the operating expenses consumed 61.34 per cent, of the gross 
 earnings, leaving net earnings not only relatively, but absolutely 
 smaller than for any subsequent year in the period. In 1876, 
 on the other hand, the operating expenses were but 40.88 per 
 cent, of the gross earnings — the lowest per cent, reached during 
 the period. The increase in gross earnings indicates, unless rates 
 were rising, that the amount of business done was steadily increas- 
 ing. We see, however, that rates during this period not only 
 did not rise, but steadily fell. It is therefore evident that the 
 traffic of the road increased even faster than the income from it. 
 This is shown also by the lines which represent the changes in 
 the amount of passenger traffic and freight traffic. Comparing 
 the years 1870 and 1878, we find that while the money receipts 
 were as i to 1.72, the numbers of passengers carried one mile were 
 as I to 1.43, and the numbers of ton-miles of freight carried were 
 as I to j.og. Thus it appears that the community, as years went 
 on, received a greater and greater service from the road, but did 
 not pay to the road correspondingly increasing sums of money. 
 
 It is also noteworthy from this chart that the operating 
 expenses remained almost constant during the years before 1879. 
 This may in part be accounted for by the nature of the industry. 
 Since a railway has a large amount of capital invested in road- 
 bed and equipment, upon which investment it must pay the same 
 interest under all circumstances, and since it must maintain a 
 working force and pay their salaries as long as the road is 
 operated, whether business is slack or brisk, a large share of its 
 expense account is predetermined and independent of the 
 amount of business done. This is a characteristic common to 
 all industries using much fixed capital, the railway being the 
 most striking exemplification of it. 
 
 It is also to be remembered in this connection that very few 
 
CHA.RT I. 
 
 1872 1873 1874 1875 1876 1877 1878 
 
 1870 1871 1872 1373 1874 1878 1876 1877 1878 1879 
 
CH-A-R.T II. 
 
 40 
 
 1880 1 88 1 1 832 1 883 1 884 1 885 1 886 f 887 1888 
 
 189D 1 89 1 I8B2 1893 1894 
 
 40 
 
 UNION PACIFIC RAILWAY COMPANY 
 
 Gross Earnings = total shaded portion. i 
 
 Net Earnings i ^^^ 
 
 Operating Expenses i ^^^^ 
 lOne space=$i,ooo,ooo. 
 
 Freight rates, per ton-mile « ^» 
 
 Passenger rates, per pass- _ 
 enger-mile 2 B* 
 
 Figures not available |® 
 
 20ne space=$.ooi. 
 
 1883 1894 
 
FINANCIAL HISTORY OF THE UNION PACIFIC. Zj 
 
 railways have their carrying capacity taxed to anything like the 
 full extent, and that most of them can double their services to 
 the community with only a slight increase of expense to them- 
 selves. When a company has created enough railway facilities 
 to meet the normal requirements of a community, it has at the 
 same time created the facilities for a traffic many times as large. 
 For instance, all the traffic between Chicago and Kansas City, 
 which is now divided among more than half a dozen roads, 
 could be carried easily by one road. To supply local facilities 
 to the intervening territory, all the existing roads are necessary — 
 perhaps more ; yet they could carry tenfold the present traffic 
 and not be overtaxed. 
 
 However, this so very slight increase in the sums spent on 
 operating expenses in the case of the Union Pacific from 1870 to 
 1878, while the trafific handled made such a marked growth, 
 raises the question whether this class of expenditures was not 
 kept down by letting the physical condition of the road decline. 
 But as we are now concerned with the income only, and as to 
 answer this question would require an analysis of the expendi- 
 tures of the road, its consideration may be postponed for the 
 present. 
 
 Turn now to Chart II, which represents the same set of facts 
 for the Union Pacific Railway Company for the years from 1880 
 to 1894. It will be remembered that this company was formed 
 in 1880 by the consolidation of the Kansas Pacific and the 
 Denver Pacific with the original Union Pacific Railroad Com- 
 pany, the aggregate mileage of the three companies being 1842 
 miles of road. 
 
 This chart shows that the gross earnings were in 1880 g22,- 
 275,655.40, that they reached their highest point in 1 881, fell 
 lowest in 1885, and were, in 1894, $14, 739, 436.76- Thus the 
 course of gross earnings was, during these fourteen years, 
 slightly downward. The operating expenses, meanwhile, rose 
 slightly. Thus there was a considerable decrease in the net 
 earnings of the road. The reason for this is made evident by a 
 glance at the lines which represent the course of freight and pas- 
 
88 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 senger rates, the fall being very marked in each. Passenger 
 rates fell from 3.34 cents per mile in 1881 to 1.865 cents per 
 mile in 1894, a decrease of 45 per cent, from the standard of 
 1 881; while freight rates dropped from 1.98 cents in 1881 to 
 .984 cents in 1894, a decrease of 51 per cent. This difference 
 of 6 per cept. in the rates of decrease does not, as will soon be 
 shown, adequately indicate the greater importance of the fall in 
 freight rates. 
 
 The increase in operating expenses, which is quite marked for 
 the period beginning with 1884, probably indicates that a better 
 quality of service was rendered as years went on. 
 
 To sum up the facts shown by Chart II : During this period 
 the amount of services to the community was increased ; the 
 quality of service was probably raised ; this service was given 
 for lower rates. While the community gained in all these par- 
 ticulars the company was steadily surrendering its prosperity. 
 And when it is said that the company lost, it is worth while to 
 consider who is meant. The company is not a small circle of 
 ofificers who conduct the affairs of a business concern whose 
 visible body is a network of iron rails. It is not merely a soul- 
 less corporation. The Union Pacific Railway Company is rather 
 a widely scattered body of investors, living largely in the East, 
 whose money, invested in a certain railway property, vastly 
 increases the productiveness of a certain section of the West. 
 
 What Chart II did for the Union Pacific Railway Company, 
 Chart III does for the Union Pacific Railway system, — by which 
 is meant the Company, together with all the branch lines and 
 feeders in which the Company is interested. 
 
 The facts which drew attention in the preceding chart are 
 here still more striking. In this one, another line has been added 
 to show the increase in mileage. By this it appears that the 
 mileage of 1880, 2766.30 miles, steadily grew to 7690.57 miles in 
 1893. Roughly following this increase in mileage is the increase 
 in gross earnings. Together with this increase in gross earn- 
 ings must be considered the fall of passenger and freight rates, 
 as striking in the case of the system as a whole as it was with the 
 
CHART III 
 
 Owing to complications brought about by the Receivership, it was found impossi- 
 ble to include in the statements covering the financial operations of the Union Pacific 
 Railway System the figures relating to certain lines which had previously appeared as a 
 part of the system. Since this change in the basis of the accounts destroys their value 
 for comparison with the figures of previous years, no account of the year 1894 is taken 
 in the charts and tables relating to the Union Pacific Railway System. They are easily 
 accessible in the annual report of the company to any one wishing to examine them. 
 
 The roads omitted from the accounts of 1894 are the Oregon Short Line & Utah 
 Northern Railway Co.; the Union Pacific, Denver & Gulf Railway Co.; the Union 
 Pacific, Lincoln & Colorado Railway Co.; the St. Joseph & Grand Island Railroad 
 Co.; and the Kansas City & Omaha Railroad Co. 
 
^_ 
 
 
 
 
 
 
 CH^RT TV 
 
 . 
 
 
 
 
 
 
 
 
 
 50 
 25 
 20 
 IB 
 10 
 B 
 
 1880 1881 1882 1883 1884 I88S 1886 1887 1888 1880 1890 1891 1892 1893 iftu 
 
 30 
 2B 
 20 
 IB 
 10 
 S 
 
 
 
 
 1 1 1 1 1 1 1 1 1 
 
 
 
 
 
 
 
 UNION PACIFIC RAILWAY COMPANY 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Expr< 
 
 es V/////A 
 
 Jr'assenger I 1 
 
 Freight ) | 
 fOne SDace= 
 
 
 
 
 
 
 
 .. miiiiiiiiii 
 
 
 
 
 
 
 
 Mail lllllllllllll • ■ $1,000,000) 
 
 
 
 
 
 
 myy^ 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 m& 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 '/////// 
 
 
 Mf 
 
 $S$S^ 
 
 W///. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 lIllHIII 
 
 
 
 . . ■ ■'.'-■'' 
 
 W^/ 
 
 
 
 
 
 
 
 
 
 
 
 
 
 • .\\\ 
 
 y/,'i'i'y, 
 
 ':'/<''/', 
 
 
 
 
 liilllll 
 
 y/M 
 
 
 
 
 VMM. 
 
 'm^ 
 
 W/A 
 
 <m^ 
 
 y///M 
 
 « 
 
 
 
 
 m 
 
 -^- 
 
 
 
 y/M 
 
 
 " i i'iifiV 
 
 Itt 
 
 illiliili 
 
 
 Illiliili 
 - 
 
 <S;w.v 
 
 Illiliili 
 
 y//////. 
 
 
 
 
 
 
 ^= 
 
 ttttttr 
 
 LUULLJ 
 
 
 
 
 — 
 
 — 
 
 
 
 =^ 
 
 
 M 
 
 
 
 
 
 
 == 
 
 
 
 
 
 
 
 
 
 
 IJ 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1880 1881 1882 1883 1884 1885 1886 1887 1888 1889 1880 1891 1892 1893 1894 
 
 
 
OHA-RT V 
 
 1881 1882 1883 1884 I88S l886 1687 1888 1889 
 
 40 
 
 UNION PACIFIC RAILWAY 
 SYSTEM 
 
 One space = $i,oco,ooo. 
 
 Miscellan's sources 
 
 Express 
 
 Mail 
 
 IB 
 
 IB 
 
 10 
 
 10 
 
 1880 1881 1882 1883 1884 I88S 1886 1887 18 
 
 1891 1392 1893 
 
FINANCIAL HISTORY OF THE UNION PACIFIC. 89 
 
 nucleus of the system, the railway. So again we see that the 
 traffic done for the community increased faster than the remu- 
 neration for it. A very noticeable feature of this chart is the rapid 
 rise in operating expenses, due to the unsatisfactory nature of 
 some of the branch lines.' This kept net earnings stationary 
 throughout the period. 
 
 Again we find all the changes for the benefit of the commu- 
 nity, and all at the expense of the road. 
 
 The income, which has thus far been taken as a whole, should 
 now be separated into its component parts, in order to show the 
 relative importance of the very various sums which make it up. 
 For this purpose Charts IV and V have been constructed. 
 
 It will be noticed at once that Charts II, and IV and Charts 
 III and V are identical in outline, the former two dealing with the 
 gross earnings of the Union Pacific Railway Company, and the latter 
 two with the gross earnings of the Union Pacific Railway system. 
 
 This difference is to be noted between the first three charts, 
 and Charts IV and V. In the first set both gross earnings and 
 operating expenses began at the base line. Here the areas are 
 mutually exclusive. The lower one represents earnings from 
 freight, the next earnings from passenger traffic, and above are 
 three small areas representing earnings from mail, express, and 
 miscellaneous sources. 
 
 Both Chart IV and Chart V show the very great preponder- 
 ance of one item — freight earnings ; that the passenger traffic is 
 of very secondary importance ; and that the income from mail, 
 express, and miscellaneous sources is insignificant. It is indi- 
 cated by the facts presented in these charts, and the opinion is 
 confirmed by a further study of the question, that a western rail- 
 way, if circumstances permitted it to do so, would be better off if 
 it did no business but handling freight. Passenger rate wars are 
 noticed by far more people than are freight rate wars, but from 
 these charts it appears that the Pacific railways can afford to 
 amuse themselves and the community by cutting passenger rates, 
 while to cut freight rates is a decidedly serious matter. 
 
 ' Alluded to where the theory of branches was discussed, page 66 above. 
 
go HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 In studying the succeeding charts the relative importance of 
 .the items shown in Charts IV and V must constantly be borne 
 in mind, else a false impression will be gained, for it has not 
 seemed practicable to represent in all of them the same sum of 
 money by the same area. 
 
 Next let us consider separately several of the sources of 
 income, beginning with freight, it being by far the most impor- 
 tant. For the Railway Chart VI shows, by the shaded portion, 
 the steady and considerable increase in tonnage carried ; the 
 rates, falling rapidly until 1884 and less rapidly thereafter; the 
 consequent marked decrease in money receipts to 1884, and 
 thereafter the almost imperceptible recovery, ending with a fall- 
 ing off in 1894 of 33 per cent, from the figures of 1892. 
 
 Chart VII, representing the freight traffic for the system, 
 shows a more rapid increase in tonnage than was shown for the 
 railway. The rates, changing more steadily, fell off about as 
 much for the system as for the railway. The course of money 
 receipts was, owing to the great increase in tonnage carried, 
 decidedly upward, although much less so than the course of the 
 tonnage. 
 
 Charts VIII and IX, exhibiting -the passenger business for 
 the railway and the system respectively, show facts in keeping 
 with what was seen in regard to the freight business. In both 
 cases rates fell ; as a result, the increased traffic of the railway 
 was done for a sum absolutely less as years went on ; while for 
 the system the very greatly increased traffic was done for a sum 
 relatively less at the end than at the beginning of the period. 
 
 It will be remembered from Charts IV and V that mail and 
 express business brought small and regular amounts into the 
 treasury. As nothing would be gained by a further elaboration 
 of these facts they may be passed over. But the third of the 
 small spaces shown in those charts, the income from miscella- 
 neous sources, includes two items which are interesting, although 
 far frorri important from a financial point of view. These are the 
 income from the land grants of the Union Pacific Railroad and the 
 Kansas Pacific, and from the coal mines owned by the former 
 

 CHART VI. 
 
 
 „^ I88Q I&8I 1882 1883 1884 1885 1886 1887 1888 1889 1890 1891 1892 1893 1894 „^ \ 
 
 IB 
 
 10 
 A 
 
 B 
 
 1 1 i 1 1 1 
 
 1 1 T 
 
 UNION PACIFIC RAILWAY CO 
 
 MPANY 
 
 
 
 ioo,cxx),ooo ton-milesi | jl | | ] | ava 
 
 fable I® ®l 
 
 Revenue (one space= ^— » 
 
 1R 
 
 
 
 (one space=$.oo2) " " 
 
 
 
 TTTTT 
 
 
 
 
 , 
 
 
 .. - -- 70 
 
 . ^.. -^-.^...^^ 
 
 
 
 
 ^^\ 
 
 
 - "l--: 
 
 1 — III ■ 1 1 li 1 1 jj |i| 
 
 
 
 '" "5 * 
 
 1 
 
 
 
 
 
 
 
 
 
 1880 188 1882 1883 I8S4 1885 1886 1887 188 
 
 1889 1890 189! 1892 1893 1894 
 
CH^RT -VXl. 
 
 1880 1881 1882 1883 1884 I88S 1886 1887 
 
 ,w 
 
 1880 1881 1882 1883 
 
 1884 1885 1888 1887 
 
 1888 
 
 1889 
 
 I8S0 
 
 1891 
 
 1892 
 
 1893 
 
 
 
 i 
 
 1 1 
 
 
 
 
 
 
 
 
 
 UNION PAC 
 
 FIC RAILWAY 
 
 
 
 
 
 
 
 
 
 SY 
 
 STEM "^ ' 
 
 
 
 
 
 
 
 
 
 Tonnage (one 
 
 
 
 
 
 
 
 
 
 
 
 
 2f} 
 
 
 
 
 
 
 
 
 
 
 
 J2,000,000 
 
 1 1 
 
 
 
 
 
 
 "T 
 
 
 
 
 Rate per ton- 
 
 Tiile 
 
 
 
 
 
 
 
 
 
 
 tone spact 
 
 
 
 
 
 
 
 
 
 
 
 
 tig-ures not a 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 20 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 IB 
 
 
 
 
 1 
 
 
 
 
 
 
 IB 
 
 
 
 
 
 ■ 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Ae '.. _, 
 
 
 
 
 
 
 
 ^^^ 
 
 
 
 
 
 
 
 10 
 
 
 mr 
 
 TO 
 
 
 ^ 
 
 ' '■ 
 
 
 
 
 
 . . _ . . 
 
 'm 
 
 
 
 
 
 
 
 
 
 '""■ . 
 
 
 
 
 
 
 -t- ■■"-■ 
 
 " 
 
 ' "T" 
 
 
 ►■-. . 
 
 A 
 
 B 
 
 
 ■'-:. 
 
 
 
 
 
 
 
 s- 1- 
 
 
 
 
 
 
 
 V* 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 '-■ 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 I8e0 1891 I8S2 1893 
 
OHA.RT "VTXt. 
 
 
 \m I8SI 1882 1883 1884 1885 I88S 1887 
 
 1888 1889 1890 1891 1892 1893 |894 
 
 
 
 III 
 
 
 
 
 u 
 
 NION PACIFir RAIIWAY 
 
 
 
 
 
 COMPANY 
 
 
 
 
 V 
 
 
 
 
 
 
 
 
 R 
 
 
 
 
 2B 
 
 
 $300,000) 1 1 
 
 
 05 
 
 R 
 
 ate Der oasseneer- - . 
 
 
 
 
 
 
 
 F 
 
 giiTf"; Tint availnhlp j g. ^ ^^ 
 
 
 
 
 
 
 
 
 
 
 lOne space= 10,000,000 pass- 
 enper- miles 
 
 
 
 
 
 2 One space=S.oo2 
 
 
 
 20 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 A^,- = 
 
 "■^ — •^ 
 
 
 
 
 
 TTTTT ^ 
 
 ,.t. 
 
 fff 
 
 lb 
 
 
 ^Tn. --J-- 
 
 ....i 
 
 
 
 
 ;::i. 
 
 
 
 
 
 
 
 
 
 
 "-■ ■" + ■ ■ -i" 
 
 •■•■•■•■•- 
 
 
 10 
 
 
 
 "'■ ■-.--• ■'"-■ . 
 
 - 10 
 
 1 
 
 
 
 S 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 ' 5 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 X 
 
 
 
 
 1380 1 
 
 83 1882 J883 1884 1885 1886 1387 
 
 1888 1889 1890 1891 1892 1893 1 
 
 S94 
 
CHJ^RT TX:. 
 
FINANCIAL HISTORY OF THE UNION PACIFIC. QI 
 
 road. So much has been said about the reckless munificence of 
 the government in bestowing the land grants, and so many attacks 
 have been made on the Union Pacific Railroad Company for its 
 extortions practiced through the coal trade, that it is worth while to 
 get at the facts as to the true value of these possessions to the roads. 
 
 Charts X and XI present the available facts of the history 
 of the land grants which were given to the original Union Pacific 
 and to the Kansas Pacific. On the former it will be noted that 
 the highest price was paid in 1877 and that the price dropped 
 with marvelous rapidity after 1 88 1 to its lowest point in 1886 — 
 thus following the price of wheat. In 1887 began a rally which 
 in 1888 carried the price almost to its former level — the effect of 
 the boom of 1887. Then came a fall almost to the old lowest 
 level, with a subsequent partial recovery. For three years, 1889, 
 1892 and 1894, the Union Pacific land department was run at a 
 not inconsiderable loss. 
 
 The price of the lands of the Kansas Pacific ranged higher 
 than those of the Union Pacific, its grant lying farther east and 
 south. The fluctuations in price, moreover, were far less violent, 
 and the tendency was decidedly upward. For 1892, 1893 and 
 1894 however, there was a deficit. 
 
 But the transactions of the land department were never impor- 
 tant. For only three years on the Union Pacific and for four on 
 the Kansas Pacific did the net proceeds from land sales reach the 
 million-dollar point. 
 
 Still less important was the coal business of the Union Pacific 
 Railroad Company, shown by Chart XII. The number of tons 
 mined rose steadily ; the cost tended unsteadily downward ; the 
 price, for the later years when it can be ascertained, tended 
 downward at about the same rate as the cost, but with less violent 
 fluctuations. The proximity of the lines representing price and 
 cost show that the profit per ton has never been large, and the 
 crossing of the lines in three places shows that for three years 
 the coal properties were conducted at an actual loss. This is 
 also shown by the sinking below the base line of the line which 
 bounds the net earnings of the department. 
 
g2 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 The preceding discussion has pointed out the advantages 
 which have come to the states in which the Union Pacific system 
 ramifies, through the increase in mileage, the fall in both passen- 
 ger and freight rates, and the betterment of the service rendered. 
 Let it not be understood that these things are represented as 
 due to the generosity of the management, or even to the far- 
 sighted selfishness which prompts the railway manager to lower 
 rates so as to increase traffic. All of them have come about in 
 the course of a struggle against strong competitors for a living 
 trafific. What has happened to the Union Pacific has happened 
 to dozens of other roads. The difference has been that, under 
 its peculiar handicaps, this competition has, in the case of the 
 Union Pacific, forced matters over the danger line, and a bad 
 season has put the road into the hands of receivers. Other 
 roads, struggling in the same mire of unrestricted competition, 
 have been less unfortunate and have escaped with the cutting 
 down or the annihilation of dividends. A comparison of the 
 expense ratios of the Union Pacific and its competitors shows 
 that all the trans-Missouri roads are in the same class and all 
 run on the same principles. But on account of its peculiar 
 relations to the government the affairs of the Union Pacific have 
 attracted much more than their just share of public attention. 
 
 With this study of the income of the Union Pacific, we come 
 to the questions of expenditure. Have the funds of the Com- 
 pany been wisely and honestly expended ? This is a question 
 which it is far from easy for an outsider to answer. A study of 
 the sums expended year after year,^ shows, neither in their totals 
 nor in their component parts, any fluctuations violent enough to 
 arouse suspicion. Changes in management do not seem to have 
 resulted in radical changes in policy, so we may perhaps infer 
 that there were no glaring faults to be corrected. 
 
 A comparison of the expense ratios of the Union Pacific and 
 other roads in the same region reveals nothing of moment ; the 
 differences are not wide enough to be significant. It might be 
 
 •See tables facing p. 124, Appendix. 
 

 
 
 
 
 
 ■^^^ 
 
 
 
 CHART X 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1874 1875 1876 1877 1878 i879 I8S0 1881 
 
 1882 1883 1884 1885 I8S6 [837 
 
 1888 1889 
 
 1890 
 
 1891 1892 1893 1894 
 
 
 46 
 40 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 46 
 
 
 UNION PACIFIC RAILROAD 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Total Proceeds 
 
 (one space=$i5o,oo 
 
 Expenses 
 
 (one space=$i5o,CK> 
 
 UOMPANY 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 0) |(=^ 
 1 
 
 
 
 
 
 \ 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 \ 
 
 
 
 
 
 
 
 
 
 
 
 
 
 0, , 1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 40 
 
 as 
 
 30 
 26 
 20 
 16 
 10 
 B 
 
 
 Price per acre 
 
 Total net acreage 
 
 (one space=ioo,ooo B&— Ofl 
 
 acres) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 as 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1 1 
 
 
 
 
 
 
 
 
 
 
 
 so 
 
 
 
 
 
 
 
 
 
 
 
 1 1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 2S 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 F 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1 
 
 
 1 
 
 
 
 
 
 
 
 
 
 
 20 
 
 
 
 
 
 
 
 
 
 
 
 
 1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 IB 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 10 
 
 A*t 
 
 
 
 r 
 
 N 
 
 
 y*— 
 
 -v. 
 
 •v 
 
 
 
 
 
 
 
 
 
 
 
 
 
 \ 
 
 V- 
 
 
 / 
 
 
 V^ 
 
 
 
 \ 
 
 1 
 
 -I- 
 
 
 - 1- ■ 
 
 
 
 
 
 
 
 
 
 
 
 
 -^ 
 
 ^ 
 
 
 
 
 I 
 
 
 
 V 
 
 
 
 
 
 A 
 
 
 
 
 
 
 
 
 
 
 
 • 
 
 
 
 
 
 
 
 / \ 
 
 
 \ 
 
 
 
 / 
 
 N 
 
 
 
 .^ 
 
 
 
 B 
 
 
 
 
 
 
 
 
 
 / 
 
 
 \ 
 
 \ 
 
 
 / 
 
 
 ,v 
 
 
 y 
 
 y 
 
 
 Na 
 
 
 
 
 
 |5L 
 
 
 
 
 / 
 
 
 \._ 
 
 — »^ 
 
 \ 
 
 / 
 
 
 
 ^ 
 
 
 
 
 
 
 Rn 
 
 1 h 
 
 
 
 /' ■ 
 
 ""^ 
 
 
 
 1 
 
 
 
 
 ""*r» 
 
 
 
 
 
 
 
 
 
 
 _C^J 
 
 K 
 
 — ^ 
 
 /' 
 
 
 
 ::=^©— 
 
 
 —^y— 
 
 
 1 
 
 
 , 
 
 
 
 
 
 
 
 
 
 
 
 ~^~ 
 
 
 -V.' 
 
 
 
 
 -^' 
 
 
 
 
 
 
 r-^. 
 
 
 ^^- 
 
 _^3 — 
 
 -JS 
 
 
 1— wr 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 -=5F' 
 
 
 
 \ 
 
 \ 
 
 ■ -^ 
 
 / 
 
 -•aB 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 k 
 
 1 
 
 
 1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 — ^ 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1874 1875 1876 1877 I'SIS I87S 1880 1881 
 
 1882 1883 1884 1885 1886 1887 
 
 1888 1889 
 
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FINANCIAL HISTORY OF THE UNION PACIFIC. 93 
 
 possible to learn something by a more minute comparison of the 
 accounts of the Union Pacific and its competitors, if railwaj- 
 accounting had been reduced to a science. But each road has 
 developed its own system of bookkeeping, no two systems are 
 alike, no two roads distribute the items of expenditure among 
 the various heads in the same way, and hence no comparison is 
 possible.' 
 
 Bearing in mind, then, that only an expert accountant, with 
 the greatest facilities for investigating and unlimited time, could 
 say positively that the figures presented to the public by the 
 Union Pacific Company have or have not been made to hide 
 fraud, it is safe to say this at least : The funds of the Union 
 Pacific seem to have been spent properly. 
 
 A study of the fluctuations of the funded debt of the sys- 
 tem is still more remotely indicative of the real state of affairs, 
 but does not alter the conclusion already reached. The growing 
 debt can be explained only by the expansion in mileage, and 
 that expansion we have already commended. But the commen- 
 dation was given on the supposition that the expense was to be 
 borne out of profits which might otherwise have gone to divi- 
 dends. Whether expansion would be wise when it necessitated 
 the issue of new bonds is another matter, and the fate of the 
 Atchison system is a striking argument against it. But what 
 evidence can be gotten at does not point to any very radical 
 faults in the line of expansion. If anything in the case of the 
 Union Pacific is legitimate ground for complaint, it is the manip- 
 ulation of the price of its securities. That, however, is not a 
 matter of railway management, but of Wall Street speculation. 
 
 ' This unsatisfactory state of affairs, however, is disappearing under the influence 
 of the Interstate Commerce Commission. 
 
CHAPTER VIII. 
 PROPOSALS FOR SETTLEMENT AND PRESENT STATUS. 
 
 The government of the United States, as creditor of the 
 Pacific railways, is constantly liable to be drawn into disputes 
 which involve it, the sovereign, in contests before its own courts 
 with its creatures, the railway companies. The government, as 
 supreme lawmaker, is also constantly tempted to alter its sta- 
 tus as one of the parties to a contract, by altering the laws 
 which govern the railways — as it certainly seems to have done 
 in the case of the Thurman Act. The undesirable features of 
 such a case, an attempt to mix politics and business, are too evi- 
 dent to need enumeration. They have from the beginning 
 impressed every student of the situation, and particularly the 
 men who have been obliged to conduct the business affairs of 
 the roads under these untoward influences. In consequence, the 
 owners of the properties have, at various times, offered to pro- 
 vide for the payment of the debts before their maturity, if they 
 could by so doing be freed from all connection with the govern- 
 ment. As several of these offers were eminently fair and made 
 by men who could have executed them without difficulty, it is 
 at first surprising that they were not accepted. But the diffi- 
 culty is always present that no one man or small body of men 
 can negotiate in behalf of the government and bind it to a bar- 
 gain. There is required the concurrent action of both houses of 
 Congress and the President, and to get such action requires an 
 amount of agitation the energy for which no one has as yet been 
 able to spare. Consequently, with the first of the subsidy bonds 
 already due, the Pacific railway problem is still unsolved. 
 
 Soon after Gould took hold of the Union Pacific and before 
 he had begun to buy Kansas Pacific, he and General G. M. 
 
 94 
 
PROPOSALS FOR SETTLEMENT AND PRESENT STATUS. 95 
 
 Dodge formulated two plans for the settlement of the govern- 
 ment claims on the Union Pacific. These plans, made before the 
 dividend-paying period began, were based on the earning capac- 
 ity which the road had thus far been able to develop ; they 
 contemplated nothing more than the payment of the debt within 
 twenty years of its maturity. There was then almost as much 
 doubt of the possibility of performing this feat as there is now, 
 but that is not what defeated the plans. It was the baneful 
 influence of Wall Street which induced the government oiificials 
 to reject the offers.' 
 
 February lO, 1875, Mr. Dillon, president of the Union 
 Pacific, submitted to the Secretary of the Treasury an offer to 
 pay 8500,000 per year for twenty years, and thereafter 8750,000 
 per year, these sums to be put into a sinking-fund, and the 6 per 
 cent, interest thereon to be compounded semi-annually until the 
 whole amount accumulated equaled the whole of the debt to 
 the government.' Again the government let an opportunity 
 for a settlement slip through its fingers. 
 
 The dispatches from Washington of February 18, 1875, con- 
 
 ' General Granville M. Dodge : " When Mr. Gould came into the road he com- 
 menced giving it [the payment of the debt to the government] a good deal of con- 
 sideration, and we formulated a plan — two plans; it is impossible for me to state 
 exactly what they were, but I can give the substance. One was a plan in which we 
 calculated the present value of the debt and agreed to make a payment that would 
 pay that debt off in a certain length of time. Another plan was one by which we 
 agreed to pay so much per year that should be made a sinlcing-fund, and increase 
 upon the gross earnings. I went to Washington with the propositions, and went 
 before the Secretary of the Treasury, Mr. Bristow, and called his attention to it ; I got 
 him to consider it ; he took it up and made some changes in it ; it was then taken 
 before the Cabinet ; it was approved ; I went with it before the President, General 
 Grant, and he approved it ; and they wrote their messages, and were about to present 
 them to Congress, when it commenced getting into the papers. There was an 
 immense short interest in Union Pacific stock, and they sent representatives to Wash- 
 ington who went to General Grant and made him believe that this proposition of the 
 company was for the purpose of booming the stock, and that laid the plan by. Gen- 
 eral Grant has told me a great many times since that he regretted very much that he 
 did not put the matter before Congress and settle the thing then. The proposition 
 that we made then would, I think, have paid the debt off within twenty years after it 
 was due." — Pacific Railway Commission, p. 3815-6. 
 
 = Commercial and Financial Chronicle, February 13, 1875. 
 
96 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 tain a letter of Vice-President C P. Huntington of the Central 
 Pacific, offering to pay semi-annually ^200,000, interest to be 
 compounded as in the Union Pacific offer, these payments to be 
 continued until the government claim was met.' This offer was 
 embodied in a bill and presented by Senator Edmunds,^ but 
 shared the same fate as the preceding one. 
 
 Again, while the Thurman Act was pending, Jay Gould 
 offered to pay in cash the present worth of the whole subsidy 
 debt of the Union Pacific^ The answer of the government was 
 the passage of the Thurman Act. 
 
 Charles Francis Adams, in 1887, voicing the opinions of the 
 stockholders of the Union Pacific, approved such a plan as Gould 
 had formulated, and said that a basis for settlement would soon 
 be found if an offer was made to set the road free from govern- 
 ment interference.* 
 
 Various other expressions of like purport have been made from 
 time to time, but in less definite form, so they need not be enu- 
 merated. But enough has been said to indicate the constant 
 hope on the part of the railway that the hampering partnership 
 with the government might be dissolved. 
 
 Proposals for altering the relations between the Pacific rail- 
 ways and the government have come more frequently from the 
 government than from the roads. These proposals have been 
 so numerous that it is not worth while to detail them individu- 
 ally, and as they fall into two classes this is unnecessary. Of the 
 first class, those depending on a sinking-fund for the payment 
 of the debt, the Thurman Act may serve as a type. As this 
 law has received sufficient consideration, we may pass to the 
 second class. 
 
 This class, where a refunding of the debt is provided for, 
 may be represented by the Hoar Bill, introduced into the Sen- 
 ate January 21, 1885. This provided that the present worth of 
 
 ■ Commercial and Financial Chronicle, February 20, 1875. 
 ° Forty-fourth Congress, first session, vol. iv, p. 2149. 
 ^Pacific Railway Commission, p. 510-1. 
 ^ Ibid., p. 991-6. 
 
PROPOSALS FOR SETTLEMENT AND PRESENT STATUS. 97 
 
 the debt should be calculated ; that 120 bonds equal in amount 
 and aggregating the present worth of the debt should be drawn 
 up ; that these bonds, bearing 3 per cent, interest, should fall 
 due at half-yearly periods; that the security given under the 
 Acts of 1862 and 1864 for the payment of the subsidy bonds 
 should be the security for the payment of these new bonds by 
 which the old were replaced ; that default on the payment of 
 any one of these bonds for six months after its maturity should 
 be ground for foreclosure.' Congress was not yet ready to 
 adopt such a plan for settlement, so the proposal came to 
 naught. 
 
 In April 1894, Attorney-General Olney formulated a plan 
 for dealing with the debt of the Union Pacific which combines 
 some of the features of both the classes mentioned above. It 
 provides for (i) the retention of the Union Pacific organization, 
 and (2) a refunding of the debt. The details of this latter fea- 
 ture of the scheme are these : The present value of the debt 
 (July I, 1894) is to be ascertained, and bonds of the Union 
 Pa.cific Railway Company received for that sum. These bonds 
 are to bear 2 per cent, interest and to run 100 years. They are 
 • to constitute a second mortgage on the whole property of the 
 Union Pacific system — bond-aided portions and branches, real, 
 personal and mixed property. Beginning with 1905, Si, 6 50,000 
 annually is to be paid into a sinking-fund, and default for six 
 months is to be cause for foreclosure. The first-mortgage bonds 
 are also to be refunded at a lower rate of interest. (3) A third 
 mortgage is also allowed, for the purpose of keeping up the 
 physical condition of the property and meeting such emergencies 
 as may arise. The issue of this mortgage is limited by the pro- 
 vision that fixed charges must never rise above g8, 500,000, 
 which is ^4, 000,000 or $5,000,000 less than they now are. 
 
 Later in the session this plan was somewhat changed by its 
 author, and finally rejected. This result was largely due to the 
 efforts of the California members, whose bitterness against the 
 Southern Pacific Company seemed to be the chief motive. 
 
 ' Forty-eighth Congress, second session, p. 1074. 
 
98 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 The reorganization committee of the bondholders, with 
 Senator Brice as chairman, having failed to get the legislation 
 which was needed, returned the bonds which had been deposited 
 with them, and abandoned their task. 
 
 What is the present status of the Union Pacific ? and what are 
 the stumbling-blocks in the way to a settlement between the 
 company and the government ? As we have already said,' the 
 road is in the hands of receivers,^ and foreclosure suits are pend- 
 ing which affect almost the whole mileage of the system. Its 
 indebtedness is as follows : 
 
 Bonds Outstanding .p*"'^^''?, 
 
 ^ Union Pacific 
 
 Union Pacific and Kansas Pacific $78,469,785.00 $2,578,000.00 
 
 United States Bonds issued to Union Pacific 
 
 and Kansas Pacific 33,539,512.00 
 
 Interest on United States Bonds, balance of 
 
 account 18,193,197.97 
 
 Total Union Pacific Railway $130,202,494.97 
 
 Operated Roads, total 140,494,772.04 32,815,500,00 
 
 Total Owned and Operated Roads. . . $270,697,267.01 $35,393,500.00 
 
 Owned by other 
 Companies in Afloat 
 
 the System 
 
 Union Pacific and Kansas Pacific $75,891,785.00 
 
 United States Bonds issued to Union Pacific 
 
 and Kansas Pacific 33,539,512.00 
 
 Interest on United States bonds, balance of 
 
 account 18,193,197.97 
 
 Total Union Pacific Railway $127,624,494.97 
 
 Operated Roads, total $12,149,180.00 95,530,092.04 
 
 Total Owned and Operated Roads. . . $12,149,180.00 $223,154,587.01 
 
 The problem is, then, how to reorganize a railway system 
 with such earning capacity as was shown in the preceding 
 
 ' Page 67, above. 
 
 'Appointed October 13, 1893, on an application signed by the executors of the 
 will of Frederick L. Ames. The receivers named Were S. H. H. Clark, President of 
 the road; Oliver W. Mink, Controller of the road, and E. EUery Anderson, one of the 
 government directors. At a later date J. W. Doane and Frederick R. Coudert were 
 added, representing the government interest and securing to the government a majority 
 of the receivers. 
 
PROPOSALS FOR SETTLEMENT AND PRESENT STATUS. QQ 
 
 chapter ; over-capitalized, and burdened with an enormous weight 
 of interest charges ; with a history highly peculiar, which, being 
 but poorly understood, has induced a strong prejudice against the 
 road. This last feature ought not to figure in the case in the 
 slightest degree — the reorganization should be purely a business 
 affair, — but any one who has followed the action of Congress 
 concerning the Pacific railways in the past will be sure that this 
 element will enter. It is certain, however, that the more fully 
 the history of the road is understood, the more will this prejudice 
 sink into the background. 
 
 What, then, ought to be the lines upon which a plan of 
 reorganization should be constructed ? 
 
 First of all, any agreement for a settlement should be 
 negotiated with the intention of separating the railway from the 
 government — setting it free from all governmental interference, 
 making it impossible to manipulate the stock market by means 
 of congressional agitation. The introduction of a bill or a 
 resolution attacking the Pacific railways is sure to make itself 
 felt on the stock exchange. The importance of this is evident 
 when we consider that a change of one point varies the value of 
 the Union Pacific stock over ^360, 000, and congressional action 
 has in one month sent the stock down nearly 20 points. This 
 evil is the first to be gotten rid of. The government must take 
 the same position as any other creditor. 
 
 Second ; the offer made by the government must be such as 
 to appeal to the self-interest of the road. The time for paying 
 the debt must be extended and the rate of interest must be 
 lowered. Since the debt cannot be paid at maturity, concessions 
 must be made by the government as a basis for demanding others 
 from the road. 
 
 Third ; the road must, in return for the extension of time and 
 the lowering of interest, give the government a better security 
 than it now has. At present the lien of the government lies only 
 on the bond-aided portions of the system — not on the Union 
 Pacific terminals, nor on the Kansas Pacific terminals ; on only a 
 part of the line of the Kansas Pacific ; on no part of the Denver 
 
100 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 Pacific ; on none of the branch lines. The road must be induced 
 to secure the debt by putting a blanket mortgage on the whole 
 system. This it was willing to do some years ago, whether it is 
 so now or not. 
 
 Fourth ; the provision for the payment to the government of 
 a percentage of net earnings must be abolished. This neces- 
 sitates governmental inspection and interference, and induces 
 disputes. The payments must be predetermined amounts, so 
 that the company can forecast the demands to be made upon it. 
 
APPENDIX I. 
 
 ACTS CHARTERING THE UNION PACIFIC RAILWAY. 
 
 An Act to aid in the construction of a Railroad and Telegraph 
 Line from the Mississippi River to the Pacific Ocean, and to secure to 
 the Government the use of the same for Postal, Military, and other 
 purposes. 
 
 [Section i names 158 men, from twenty-four states and one territory, who, 
 "together with five commissioners to be appointed by the Secretary of the Inte- 
 rior, and all persons who shall or may be associated with them, and their suc- 
 cessors," are incorporated under the title of The Union Pacific Railroad Com- 
 pany. It provides that "the capital stock of said company shall consist of 
 one hundred thousand' shares of one thousand dollars' each, which shall be 
 subscribed for and held in not more than two hundred shares by any one per- 
 son."' The 163 persons referred to above are constituted the " Board of Com- 
 missioners of the Union Pacific Railroad and Telegraph Company," a modifi- 
 cation of the name previously used, and the organization of the Board is 
 directed to take place within three months. Books for subscriptions of stock 
 are to be opened, and 10 per cent, on such subscriptions required in cash. 
 The next sentence provides that when 2000 shares are subscribed for and ten 
 dollars per share paid in — i per cent., not 10 percent., — the Board shall call 
 a meeting of the stockholders, at which meeting there shall be elected not less 
 than thirteen" directors. .The duties of the Board terminate with the formal- 
 ities connected with this first election, and the Board ceases to exist. There- 
 after the stockholders constitute the company.] 
 
 At the time of the first and each triennial election of directors by the stock- 
 holders, two 3 additional directors shall be appointed by the President of the 
 United States, who shall act with the body of directors, and to be denominated 
 directors on the part of the Government ; any vacancy happening in the Gov- 
 ernment directors at any time may be filled by the President of the United 
 States. The directors to be appointed by the President shall not be stock- 
 holders in the Union Pacific Railroad Company. The directors so chosen 
 shall, as soon as may be after their election, elect from their own number a 
 president and vice president, and shall also elect a treasurer and secretary. 
 
 'Amended by sec. I of the Act of 1864. See page no below. 
 
 2 Amended by sec. 13 o£ the Act of 1864. See page 113 below. 
 
 3 Ibid. 
 
 lOI 
 
102 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 No person shall be a director in said company unless he shall be a bona fide 
 owner of at least five ' shares of stock in the said company, except the two 
 directors to be appointed by the President as aforesaid. 
 
 Sec. 2. And be it further enacted, That the right of way through the pub- 
 lic lands be, and the same is, hereby granted to the said company for the con- 
 struction of said railroad and telegraph line, and the right, power, and authority 
 is hereby given to said company to take from the public lands adjacent to the 
 line of said road, earth, stone, timber and other materials for the construction 
 thereof ; said right of way is granted to said railroad to the extent of two hun- 
 dred ° feet in width on each side of said railroad where it may pass over the 
 public lands, including all necessary ground for stations, buildings, workshops, 
 and depots, machine shops, switches, side tracks, turntables, and water sta- 
 tions. The United States shall extinguish as rapidly as may be the Indian 
 titles to all lands falling under the operation of this act and required for the 
 said right of way and grants hereinafter made. 
 
 Sec. 3. And be it further enacted, That there be, and is hereby granted to 
 the said company, for the purpose of aiding in the construction of said rail- 
 road and telegraph line, and to secure the safe and speedy transportation of 
 the mails, troops, munitions of war, and public stores thereon, every alternate 
 section of public land, designated by odd numbers, to the amount of five^ 
 alternate sections per mile on each side of railroad, on the line thereof, and 
 within the limits of ten° miles on each side of said road, not sold, reserved, 
 or otherwise disposed of by the United States, and to which a preemption or 
 homestead claim may not have been attached, at the time the line of said 
 road is definitely fixed : Provided, That all mineral lands'* shall be excepted 
 from the operation of this act ; but where the same shall contain timber, the 
 timber thereon is hereby granted to said company. And all such lands, so 
 granted by this section, which shall not be sold or disposed of by said com- 
 pany within three years after the entire road shall have been completed, shall 
 be subject to settlement and preemption, like other lands, at a price not 
 exceeding one dollar and twenty-five cents per acre, to be paid to said com- 
 pany. 
 
 Sec. 4. And be it further enacted, That whenever said company shall have 
 completed forty ^ consecutive miles of any portion of said railroad and tele- 
 graph line, ready for the service contemplated by this act, and supplied by 
 ■all necessary drains, culverts, viaducts, crossings, sidings, bridges, turnouts, 
 
 'Amended by sec. I of the Act of 1864. 
 
 = Amended by sec. 3 of the Act of 1864. See page no below. 
 
 'i Ibid., sec. 4. 
 
 ''Ibid., sec. 4. 
 
 ^ Ibid., sec. 10. 
 
APPENDIX. 
 
 105 
 
 watering places, depots, equipments, furniture, and all other appurtenances 
 of a first class railroad, the rails and all the other iron used in the construc- 
 tion and equipment of said road to be American manufacture of the best 
 quality, the President shall appoint three commissioners to examine the same 
 and report to him in relation thereto ; and if it shall appear to him that 
 forty3 consecutive miles of said railroad and telegraph line have been com- 
 pleted and equipped in all respects as required by this act, then, upon certifi- 
 cate of said commissioners to that effect, patents shall issue conveying the 
 right and title to said lands to said company, on each side of the road as far 
 as the same is completed, to the amount aforesaid, and patents shall in like 
 manner issue as each forty miles of said railroad and telegraph line are 
 completed, upon certificate of said commissioners. Any vacancies occurring 
 in said board of commissioners by death, resignation or otherwise, shall be 
 filled by the President of the United States : Provided, however, That no 
 such commissioners shall be appointed by the President of the United States 
 unless there shall be presented to him a statement, verified on oath by the 
 president of said company, that such forty miles have been completed, in the 
 manner required by this act, and setting forth with certainty the points; 
 where such forty miles begin and where the same end ; which oath shall be- 
 taken before a judge of a court of record. 
 
 Sec. 5. And be it further enacted. That for the purposes herein mentioned 
 the Secretary of the Treasury shall, upon the certificate in writing of said com- 
 missioners, of the completion and equipment of forty consecutive miles of said 
 railroad and telegraph, in accordance with the provisions of this act, issue to 
 said company bonds of the United States of one thousand dollars each, payable 
 in thirty years after date, bearing 6 per centum per annum interest (said inter- 
 est payable semi-annually), which interest may be paid in United States treas- 
 ury notes or any other money or currency which the United States shall 
 have or shall declare lawful money and a legal tender, to the amount of six- 
 teen of said bonds per mile for such section of forty' miles ; and to secure the 
 repayment of the United States, as hereinafter provided, of the amount of 
 said bonds so issued and delivered to said company, together with all interest 
 thereon which shall have been paid by the United States, the issue of said 
 bonds and delivery to the company shall ipso facto constitute a first ' mortgage 
 on the whole line of railroad and telegraph, together with the rolling stocky 
 fixtures and property of every kind and description, and in consideration of 
 which said bonds may be issued ; and oh the refusal or failure of said com- 
 pany to redeem said bonds, or any part of them, when required to do so by the 
 Secretary of the Treasury, in accordance with the provisions of this act, the said 
 road, with all the rights, functions, immunities and appurtenances thereunto, 
 belonging, and also all lands granted to the said company by the United 
 
 'Amended by sec. 10 of the Act of 1864. See page 112 below. 
 
104 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 States, which, at the time of said default, shall remain in the ownership of 
 said company, may be taken possession of by the Secretary of the Treasury, 
 for the use and benefit of the United States : Provided, This section shall not 
 apply to that part of any road now constructed. 
 
 Sec. 6. And be it further ettacied, That the grants aforesaid are made 
 upon condition that said company shall pay the bonds at maturity, and shall keep 
 said railroad and telegraph line in repair and use, and shall at all times trans- 
 mit dispatches over said telegraph line, and transport mails, troops and muni- 
 tions of war, supplies, and public stores upon said railroad for the Government, 
 whenever required to do so by any department thereof, and that the Govern- 
 ment shall at all times have the preference in the use of the same for all pur- 
 poses aforesaid (at fair and reasonable rates of compensation, not to exceed 
 the amounts paid by private parties for the same kind of service) ; and all 
 compensation for services rendered for the government shall be applied to the 
 payment of said bonds and interest until the whole amount is fully paid. Said 
 company may also pay the United States, wholly or in part, in the same or 
 other bonds. Treasury notes, or other evidences of debt against the United 
 States, to be allowed at par ; and after said road is completed, until said bonds 
 and interest are paid, at least 5 per centum of the net earnings of said road 
 shall also be annually applied to the payment thereof. 
 
 Sec. 7. And be it further enacted, That said company shall file their 
 assent to this act, under the seal of said company, in the Department of the 
 Interior, within one year after the passage of this acl, and shall complete the 
 railroad and telegraph from the point of beginning as herein provided, to the 
 western boundary of Nevada territory before the first day of July, one thousand 
 eight hundred and seventy-four : ' Provided, That within two ' years after the 
 passage of this act said company shall designate the general route of said 
 road, as near as may be, and shall file a map of the same in the Department 
 of the Interior, whereupon the Secretary of the Interior shall cause the lands 
 within fifteen miles of said designated route or routes to be withdrawn from 
 preemption, private entry, and sale ; and when any portion of said route shall 
 be finally located, the Secretary of the Interior shall cause the said lands here- 
 inbefore granted to be surveyed and set off as fast as may be necessary for 
 the purpose hereinbefore named : Provided, That in fixing the point of con- 
 nection of the main trunk with the eastern connections, it shall be fixed at the 
 most practical point for the construction of the Iowa and Missouri branches, 
 as hereinafter provided. 
 
 Sec. 8. And be it ftirther enacted. That the line of said railroad and tel- 
 egraph shall commence at a point on the one-hundredth meridian of longitude 
 
 'Amended by sec. 5 of the Act of 1864. See page 11 1 below. 
 
APPENDIX. 
 
 lOS 
 
 west from Greenwich, between the south margin of the Republican river and 
 the north margin of the valley of the Platte river, in the Territory of Nebraslia, 
 at a point to be fixed by the President of the United States, after actual sur- 
 veys ; thence running westerly upon the most direct, central, and practicable 
 route, through the territories of the United States to the western boundary of 
 the Territory of Nevada, there to meet and connect with the line of the Cen- 
 tral Pacific Railroad Company of California. 
 
 Sec. q. And be it further enacted. That the Leavenworth, Pawnee, and 
 Western Railroad Company of Kansas are hereby authorized to construct a 
 railroad and telegraph line from the Missouri river at the mouth of the Kan- 
 sas river, on the south side thereof, so as to connect with the Pacific Railroad 
 of Missouri, at the aforesaid point, on the one-hundredth meridian of longitude 
 west from Greenwich, as herein provided, upon the same terms and conditions 
 in all respects as are provided in this act for the construction of the railroad 
 and telegraph line first mentioned, and to meet and connect with the same at 
 thp meridian of longitude aforesaid ; and in case the general route or line of 
 road from the Missouri river to the Rocky mountains should be so located as 
 to require a departure northwardly from the proposed line of said Kansas Rail- 
 road shall be made so as to conform thereto ; and said railroad through Kan- 
 sas shall be so located between the mouth of the Kansas river, as aforesaid, 
 and the aforesaid point, on the one-hundredth meridian of longitude, that the 
 several railroads from Missouri and Iowa, herein authorized to connect with 
 the same, can make connection within the limits prescribed in this act, pro- 
 vided the same can be done without deviating from the general direction of 
 the whole line to the Pacific coast. The route in Kansas west of the merid- 
 ian of Fort Riley, to the aforesaid point, on the one-hundredth meridian of 
 longitude, to be subject to the approval of the President of the United States, 
 and to be determined by him on actual survey. And said Kansas company 
 may proceed to build said railroad to the aforesaid point, on the one-hundredth 
 meridian of longitude west from Greenwich, in the Territory of Nebraska. 
 The Central Pacific Railroad Company of California, a corporation existing 
 under the laws of the State of California, are hereby authorized to construct a 
 railroad and telegraph line from the Pacific coast, at or near San Francisco, 
 or the navigable waters of the Sacramento river, to the eastern boundary of 
 California, upon the same terms and conditions in all respects, as are con- 
 tained in this act for the construction of said railroad and telegraph line first 
 mentioned, and to meet and connect with the first mentioned railroad and tel- 
 egraph line on the eastern boundary of California. Each of said companies 
 shall file their acceptance of the conditions of this act in the Department of 
 the Interior within six months after the passage of this act. 
 
 Sec. 10. And be it further enacted. That the said company chartered by 
 the state of Kansas shall complete one hundred miles of their said road, 
 
I06 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 commencing at the mouth of the Kansas river, as aforesaid, within two years 
 after filing their assent to the conditions of this act as herein provided, and 
 one hundred miles per year thereafter until the whole is completed, and the 
 said Central Pacific Railroad of California shall complete fifty miles of their 
 said road within two years after filing their assent to the provisions of this 
 act, as herein provided, and fifty ' miles per year thereafter until the whole 
 is completed ; and after completing their roads, respectively, said companies, 
 or either of them, may unite upon equal terms with the first named company 
 in constructing so much of said railroad and telegraph line and branch rail- 
 roads and telegraph lines in this act hereinafter mentioned, through the ter- 
 ritories from the state of California to the Missouri river, as shall then 
 remain to be constructed, on the same terms and conditions as provided in 
 this act in relation to the said Union Pacific Railroad Company. And the 
 Hannibal and St. Joseph Railroad, the Pacific Railroad Company of Missouri, 
 and the first named company, or either of them, on filing their assent to this 
 act, as aforesaid, may unite upon equal terms, under this act, with the said 
 Kansas company, in constructing said railroad and telegraph, to said merid- 
 ian of longitude, with the consent of said State of Kansas, and in case said 
 first named company shall complete their line to the eastern boundary of 
 California before it is completed across said State by the Central Pacific 
 Railroad Company of California, said first named company is hereby author- 
 ized to continue in constructing the same through California, with the con- 
 sent of said State, upon the terms mentioned in this act, until said roads 
 shall meet and connect, and the whole line of said railroad is completed ; and 
 the Central Pacific Railroad Company of California, after completing its 
 road across said State, is authorized to continue the construction of said rail- 
 road and telegraph through the Territories of the United States^ to the Mis- 
 souri river, including the branch roads specified in this act, upon the routes 
 hereinbefore and hereinafter indicated, on the terms and conditions provided 
 in this act in relation to the said Union Pacific Railroad Company, until said 
 roads shall meet and connect, and the whole line of said railroad and 
 branches and telegraph is completed. 
 
 Sec. II. And be it further enacted, That for three hundred miles of said 
 road most mountainous and difficult of construction, to wit : one hundred 
 and fifty miles westwardly from the eastern base of the Rocky mountains, 
 and one hundred and fifty miles eastwardly from the western base of the 
 Sierra Nevada mountains, said points to be fixed by the President of the 
 United States, the bonds to be issued to aid in the construction thereof shall 
 be treble the number per mile hereinbefore provided, and the same shall be 
 issued, and the lands herein granted be set apart, upon the construction of 
 
 •Amended by sec. 5 of the Act of 1864. See page iii below. 
 "Ibid., sec. 16. 
 
APPENDIX. 107 
 
 every twenty miles thereof, upon the certificate of the commissioners afore- 
 said that twenty consecutive miles of the same are completed ; and between 
 the sections last named of one hundred and fifty miles each, the bonds to be 
 issued to aid in the construction thereof, shall be double the number per 
 mile first mentioned, and the same shall be issued and the lands herein 
 granted be set apart, upon the construction of every twenty miles thereof, 
 upon the certificate of the commissioners as aforesaid that twenty consecu- 
 tive miles of the same are completed : Provided that no more than fifty thou- 
 sand of said bonds shall be issued under this act to aid in constructing the 
 main line of said railroad and telegraph. 
 
 Sec. 12 The track upon the entire line of railroad and branches 
 
 shall be of uniform width, to be determined by the President of the United 
 States, so that when completed, cars can be run from the Missouri river to 
 the Pacific coast ; the grades and curves shall not exceed the maximum 
 grades and curves of the Baltimore and Ohio Railroad ; the whole line of said 
 railroad and branches and telegraph shall be operated and used for all pur- 
 poses of communication, travel, and transportation, so far as the public and 
 government are concerned, as one connected continuous line ; . . . . 
 
 [Sec. 13. Provided that the Hannibal and St. Joseph Railroad Company 
 might extend its road from St. Joseph via Atchison to connect with the Kan- 
 sas line upon the same terms as were given to the Union Pacific ; or, if desir- 
 able, it might connect instead with the line westward from Omaha, but in 
 this case its subsidy was to cover only the one hundred miles lying next to 
 the Missouri River. The Leavenworth, Pawnee and Western also was author- 
 ized to build from Leavenworth a line which should unite it with the line 
 from Kansas City .J 
 
 Sec. 14. And be it further enacted, That the said Union Pacific Railroad 
 Company is hereby authorized and required to construct a single line of rail- 
 road and telegraph from a point on the western boundary of the State of 
 Iowa, to be fixed by the President of the United States, upon the most direct 
 and practicable route, to be subject to his approval, so as to form a connec- 
 tion with the lines of said company at some point on the one-hundredth merid- 
 ian of longitude aforesaid, from the point of commencement on the western 
 boundary of the State of Iowa, upon the same terms and conditions, in all 
 respects, as are contained in this act for the construction of the said railroad 
 and telegraph first mentioned ; and the said Union Pacific Railroad Company 
 shall complete the one hundred miles of road and telegraph in this section 
 provided for, in two years after filing their assent to the conditions of this 
 act, as by the terms of this act required, and at the rate of one hundred miles 
 per year thereafter, until the whole is completed : Provided, That a failure 
 upon the part of said company to make said connection in the time aforesaid. 
 
I08 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 and to perform the obligations imposed on said company by this section and 
 to operate said road in the same manner as the main Hne shall be operated, 
 shall forfeit to the Government of the United States all the rights, privileges, and 
 franchises granted to and conferred upon said company by this act. And when- 
 ever there shall be a line of railroad completed through Minnesota or Iowa to 
 Sioux City, then the said Pacific Railroad Company is hereby authorized and 
 required to construct a railroad and telegraph from said Sioux City upon the 
 most direct and practicable rotite to a point on, and so as to connect with, the 
 branch railroad and telegraph in this section hereinbefore mentioned, or with 
 the said Union Pacific Railroad, said point of junction to be fixed by the Pres- 
 ident of the United States, not further west than the one-hundredth meridian 
 of longitude aforesaid, and on the same terms and conditions as provided in 
 this act for the construction of the Union Pacific Railroad as aforesaid, and to 
 complete the same at the rate of one hundred miles per year ; and should 
 said company fail to comply with the requirements of this act in relation to 
 the said Sioux City railroad and telegraph, the said company shall suffer the 
 same forfeiture prescribed in relation to the Iowa branch railroad and tele- 
 graph hereinbefore mentioned.' 
 
 Sec. i6. And be it further enacted. That at any time after the passage of 
 this act all the railroad companies named herein, and assenting hereto, or any 
 two or more of them are authorized to form themselves into one consolidated 
 company ; notice of such consolidation, in writing, shall be filed in the Depart- 
 ment of the Interior, and such consolidated company shall thereafter proceed 
 to construct said railroad and branches and telegraph line upon the terms 
 and conditions provided in this act. 
 
 Sec 17. Atid be it further enacted. That in case said company or com- 
 panies shall fail to comply with the terms and conditions of this act, by not 
 completing said railroad and telegraph and branches within a reasonable 
 time, or by not keeping the same in repair and use, but shall permit the same, 
 for an unreasonable time, to remain unfinished or out of repair, and unfit for 
 use. Congress may pass any act to insure the speedy completion of said road 
 and branches, or put the same in repair and use, and may direct the income 
 of said railroad and telegraph line to be thereafter devoted to the use of the 
 United States, to repay all such expenditures caused by the default and neg- 
 lect of such company or companies : Provided, That if said roads are not 
 completed so as to form a continuous line of railroad, ready for use, from the 
 Missouri river to the navigable waters of the Sacramento river in California, 
 by the first day of July, eighteen hundred and seventy-six,^ the whole of all 
 said railroads before mentioned and to be constructed under the provisions 
 
 'Amended by sec. 17 of the Act of 1864. See page 114 below. 
 ° Amended by sec. 5 of the Act of 1864. See page ill below. 
 
APPENDIX. log 
 
 of this act, together with all their furniture, fixtures, rolling stock, machine 
 shops, lands, tenements, and hereditaments, and property of every kind 
 and character, shall be forfeited to and be taken possession of by the 
 United States : Provided,'^ That of the bonds of the United States in this 
 act provided to be delivered for any and all parts of the roads to be con- 
 structed east of the one-hundredth meridian of longitude west from Green- 
 wich, and for any part of the road west of the west foot of the Sierra 
 Nevada mountains, there shall be reserved of each part and installment 
 twenty-five per centum, to be and remain in the United States Treasury, 
 undelivered, until said road and all parts thereof provided for in that act are 
 entirely completed, and of all the bonds provided to be delivered for the 
 said road, between the two points aforesaid, there shall be reserved out of 
 each installment fifteen per centum, to be and remain in the Treasury until 
 the whole of the road provided for in this act is fully completed ; and if the 
 said road or any part thereof shall fail of completion at the time limited 
 therefor in this act, then and in that case, the said part of said bonds so 
 reserved shall be forfeited to the United States. 
 
 Sec. i8. And be it further enacted. That whenever it appears that the 
 net earnings of the entire road and telegraph, including the amount allowed 
 for services rendered the Lfnited States, including repairs, and the fur- 
 nishing, running, and managing of said road, shall exceed ten per centum 
 upon its cost, exclusive of the live per centum to be paid to the United States, 
 Congress may reduce the rates of fare thereon, if unreasonable in amount, 
 and may fix and establish the same by law. And the better to accomplish 
 the objects of this act, namely, to promote the public interest and welfare by 
 the construction of said railroad and telegraph line, and keeping the same in 
 working order, and to secure to the Government at all times (but particularly 
 in time of war) the use and benefits of the same for postal, military, and other 
 purposes, Congress may, at any time, having due regard for the rights of said 
 companies named herein, add to, alter, amend, or repeal this act. 
 
 Sec. 20. And be it further enacted, That the corporation hereby created 
 and the roads connected therewith, under the provisions of this act, shall make 
 to the Secretary of the Treasury, an annual report wherein shall be set forth — 
 
 First. The names of the stockholders and their places of residence, so far 
 as the same can be ascertained ; 
 
 Second. The names and residences of the directors, and all other officers 
 of the company ; 
 
 Third. The amount of stock subscribed, and the amount thereof actually 
 paid in ; 
 
 Fourth. A description of the lines of road surveyed, of the lines thereof 
 fixed upon for the construction of the road, and the cost of such surveys ; 
 'Repealed by sec. 7 of the Act of 1864, See page in below. 
 
no HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 Fifth. The amount received from passengers on the road ; 
 
 Sixth. The amount received for freight thereon ; 
 
 Seventh. A statement of the expense of said road and its fixtures ; 
 
 Eighth. A statement of the indebtedness of said company, setting forth 
 the various kinds thereof : Which report shall be sworn to by the president of 
 said company, and shall be presented to the Secretary of the Treasury on or 
 before the first day of July in each year. 
 
 Approved July i, 1862. 
 
 An Act to amend an Act entitled "An Act to aid in the construction of a 
 Railroad and Telegraph Line from the Mississippi River to the Pacific 
 Ocean, and to secure to the Government the use of the same for postal, 
 military, and other purposes,'' approved July first, eighteen hundred and • 
 sixty-two. 
 
 Be it enacted by the Senate and House of Representatives of the United 
 States of America in Congress assembled, That the capital stock of the com- 
 pany entitled the Union Pacific Railroad Company, authorized by the act of 
 which this act is amendatory, shall be in shares of one hundred dollars, 
 instead of one thousand dollars each ; that the number of shares shall be one 
 million, instead of one hundred thousand ; and that the number of shares 
 which any person shall hold to entitle him to serve as a director in said com- 
 pany (except the five directors to be appointed by Government) shall be fifty 
 shares, instead of five shares ; and that every subscriber to said capital stock 
 for each share of one thousand dollars, heretofore subscribed, shall be entitled 
 to a certificate for ten shares of one hundred dollars each ; and that the fol- 
 lowing words in section first of said act, " which shall be subscribed for and 
 held in not more than two hundred shares by any one person," be, and the 
 same are hereby repealed. 
 
 [Section 2 provided that, until the whole capital of one hundred million 
 dollars was subscribed, books for receiving stock subscriptions should be kept 
 open in seven cities which were named ; that the cash payments required on 
 subscriptions should continue the same ; that the stockholders should be 
 assessed on their holdings sums not less than five dollars per share, at inter- 
 vals not greater than six months, until the full value had been paid in ; that 
 only money should be received in payment ; that the capital stock should not 
 be increased beyond the actual cost of the road.] 
 
 [Section 3 reduced the width of the right of way to two hundred feet, and 
 provided elaborate machinery for obtaining possession of private lands needed 
 by the road.] 
 
 [Section 4 amended section 3 of the Act of 1862 so that ten sections of land 
 on each side of the track, instead of five, were given for each running mile of 
 
APPENDIX. Ill 
 
 the road, this land lying within twenty, instead of ten, miles of the track. It 
 provided that in the Act of 1862 the term "mineral land" should not be con- 
 strued to mean coal and iron land. It debarred the road from cutting timber 
 at a greater distance from its tracks than ten miles. It exempted from the 
 provisions of this act and the Act of 1862 all lands located or selected for loca- 
 tion under "An act donating lands to the several States and Territories which 
 may provide colleges for the benefit of agriculture and the mechanic arts," 
 approved July 2, 1862.J 
 
 [Section 5 extended one year the time for filing maps of the proposed routes 
 and for completing the roads ; provided that the Central Pacific company 
 need complete but twenty-five miles of track per year, instead of fifty, and 
 that it be given four years to reach the state line ; it provided, further, that 
 one-half, instead of the whole, of the sums earned by the roads by serving the 
 government should be applied on the debt to the Government.] 
 
 [Section 6 modified section 4 of the Act of 1862 so as to render it easier to 
 get possession of the subsidies, and provided that the Central Pacific should 
 receive its subsidies on the completion of twenty-mile sections instead of forty- 
 mile sections.] 
 
 [Section 7 repealed that part of section 17 of the Act of 1862, which pro- 
 vided for a reservation by the Government of a part of the bond subsidy. It 
 provided further that the failure of any one company fully to comply with the 
 conditions of this act and the Act of 1862, should work no forfeiture for the 
 others.] 
 
 Sec. 8. And be it further enacted. That for the purpose of facilitating the 
 work on said railroad, and of enabling the said company as early as practica- 
 ble to commence the grading of said railroad in the region of the mountains, 
 between the eastern base of the Rocky mountains and the western base of the 
 Sierra Nevada mountains, so that the same may be finally completed within 
 the time required by law, it is hereby provided that whenever the chief 
 engineer of the said company, and said commissioners, shall certify that a 
 certain proportion of the work required to prepare the road for the super- 
 structure on any such section of twenty miles is done, (which said certificate 
 shall be duly verified,) the Secretary of the Treasury is hereby authorized and 
 required, upon the delivery of such certificate, to issue to said company a 
 proportion of said bonds, not exceeding two-thirds of the amount of bonds 
 authorized to be issued under the provisions of the act, to aid in the construc- 
 tion of such section of twenty miles, nor in any case exceeding two-thirds of 
 the value of the work done, the remaining one-third to remain until the said 
 section is fully completed and certified by the commissioners appointed by 
 the President, according to the terms and provisions of the said act ; and no 
 such bonds shall issue to the Union Pacific Railroad Company for work done 
 west of Salt Lake City under this section, more than three hundred miles in 
 
112 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 advance of the completed continuous line of said railroad from the point of 
 beginning on the one-hundredth meridian of longitude. 
 
 [Sec. 9 gave authority to each of the companies named in the act to 
 establish ferries or build bridges across the Missouri or other rivers which lie 
 in its course, such bridges to be so built as not to interfere with navigation.] 
 
 And provided further. That any company authorized by this act to con- 
 struct its road and telegraph line from the Missouri river to the initial point 
 aforesaid, may construct its road and telegraph line so as to connect with the 
 Union Pacific railroad at any point westwardly of such initial point, in case 
 such company shall deem such westward connection more practicable or 
 desirable ; and in aid of the construction of so much of its road and telegraph 
 line as shall be a departure from the route hereinbefore provided for its road, 
 such company shall be entitled to all the benefits, and be subject to all the 
 conditions and restrictions of this act : Provided further, however. That the 
 bonds of the United States shall not be issued to such company for a greater 
 amount than is hereinbefore provided, if the same had united with the Union 
 Pacific railroad on the one-hundredth degree of longitude ; nor shall such 
 company be entitled to receive any greater amount of alternate sections of 
 public land than are also herein provided. 
 
 Sec. 10. And be it further eiiacted. That section five of said act be so 
 modified and amended that the Union Pacific Railroad Company, the Central 
 Pacific Railroad Company, and any other company authorized to participate 
 in the construction of said road, may, on the completion of each section of said 
 road, as provided in said act and the act to which this act is an amendment, 
 issue their first-mortgage bonds on their respective railroad and telegraph 
 lines to an amount not exceeding the amount of the bonds of the United 
 States, and of even tenor and date, time of maturity, rate and character of 
 interest with the bonds authorized to be issued to said railroad companies 
 respectively. And the lien of the United States bonds shall be subordinate 
 to that of the bonds of any or either of said companies hereby authorized to 
 be issued on their respective roads, property, and equipments, except as to the 
 provisions of the sixth section of the act to which this act is an amendment, 
 relating to the transmission of dispatches and the transportation of mails 
 troops, munitions of war, supplies and public stores for the Government of the 
 United States. And said section is further amended by striking out the word 
 "forty," and inserting in lieu thereof the words "on each and every section 
 of not less than twenty." 
 
 [Sec. 1 1 provided that if any company had issued, or should in future 
 issue, bonds which were a lien prior to the guaranteed bonds, their amount 
 should be deducted from the amount of the government and first-mortgage 
 bonds which that company would otherwise be authorized to issue. It also 
 
APPENDIX. 
 
 "3 
 
 provided that no subsidies should be given on roads or parts of roads built 
 before the passage of the Act of 1862.] 
 
 [Sec. 12 provided that the Union Pacific, eastern division, should build a 
 branch from the mouth of the Kansas river by way of Leavenworth, or else, 
 within two years, build from Leavenworth to Lawrence ; but should receive 
 therefor no bond subsidy.] 
 
 And if the Union Pacific Railroad Company shall not be proceeding in 
 good faith to build the said railroad through the Territories when the . . . 
 Union Pacific Railroad Company, eastern division, shall have completed their 
 road to the one-hundredth degree of longitude, then the last-named company 
 may proceed to make said road westward until it meets and connects with the 
 Central Pacific Railroad Company on the same line. And the said railroad 
 from the mouth of Kansas river to the one-hundredth meridian of longitude 
 shall be made by the way of Lawrence and Topeka, or on the bank of the 
 Kansas river opposite said towns : Provided, that no bonds shall be issued or 
 land certified by the United States to any person or company, for the con- 
 struction of any part of the main trunk line of said railroad west of the one- 
 hundredth meridian of longitude and east of the Rocky mountains, until said 
 road shall be completed from or near Omaha, on the Missouri river, to the said 
 one-hundredth meridian of longitude. 
 
 [Sec. 13 changed the number of elected directors to fifteen, and of govern- 
 ment directors to five. It provided that at least one of the latter must be a 
 member of each standing or special committee, and provided for inspections 
 of the property and reports to the Government by the Government directors. 1 
 
 [Sec. 14 provided that the next election of directors should be at New 
 York on the first Wednesday in October, 1864, and that subsequent elections 
 should be annual, at the same place.J 
 
 Sec. 15. And be it further enacted. That the several companies authorized 
 to construct the aforesaid roads are hereby required to operate and use said 
 roads and telegraph for all purposes of communication, travel, and transporta- 
 tion, so far as the public and the Government are concerned, as one continu- 
 ous line ; and in such operation and use, to afford and to secure to each equal 
 advantages and facilities as to rates, time, and transportation, without any 
 discrimination of any kind in favor of the road or business of any or either of 
 said companies, or adverse to the road or business of any or either of the 
 others, and it shall not be lawful for the proprietors of any line of telegraph, 
 authorized by this act, or the act amended by this act, to refuse, or fail to 
 convey for all persons requiring the transmission of news and messages of like 
 character, on pain of forfeiting to the persons injured for each offense, the sum 
 of one hundred dollars, and such other damage as he may have suffered on 
 
114 HISTORY OF THE UNION PACIFIC RAILWAY. 
 
 account of said refusal or failure, to be sued for and recovered in any court of 
 the United States, or of any State or Territory of competent jurisdiction. 
 
 Sec. i6. And be it further enacted, That any two or more of the companies 
 authorized to participate in the benefits of this act, are hereby authorized at 
 any time to unite and consolidate their organizations, as the same may or 
 shall be, upon such terms and conditions, and in such manner as they may 
 agree upon, and as shall not be incompatible with this act, or the laws of the 
 State or States in which the roads of such companies may be, and to assume 
 and adopt such corporate name and style as they may agree upon, with a 
 capital stock not to exceed the actual cost of the roads so to be consolidated, 
 and shall file a copy of such consolidation in the Department of the Interior ; 
 and thereupon such organization, so formed and consolidated, shall succeed 
 to, possess, and be entitled to receive from the Government of the United 
 States, all and singular the grants, benefits, immunities, guarantees, acts, and 
 things to be done and performed, and be subject to the same terms, conditions, 
 restrictions and requirements which said companies respectively, at the time 
 of such consolidation, are or may be entitled or subject to under this act, in 
 place and substitution of said companies so consolidated respectively. And 
 all other provisions of this act, so far as applicable, relating or in any manner 
 appertaining to the companies so consolidated, or either thereof, shall apply 
 and be of force as to such consolidated organization. 
 
 [Section i6 provides further that in case any company fails wholly or in 
 part to build its line within the prescribed time, the consolidated company 
 may build it on the terms originally offered, paying to the defaulting company 
 the value of the work done and materials furnished. But the defaulting 
 company may, at any time before the completion of the work, resume all its 
 rights by paying the consolidated company the value of the work done and 
 materials furnished by it. Any company refusing to enter a consolidation 
 shall have equal rights with the consolidation. It is further provided that 
 should the Central Pacific Railroad Company of California complete their line 
 to the eastern line of the State of California, before the line of the Union 
 Pacific Railroad Company shall have been extended westward so as to meet 
 the line of said first-named company, said first-named company may extend 
 their line of road eastward one hundred and fifty miles on the established 
 route, so as to meet and connect with the line of the Union Pacific road, com- 
 plying in all respects with the provisions and restrictions of this act as to said 
 Union Pacific road, and upon doing so, shall enjoy all the rights, privileges, 
 and benefits conferred by this act on said Union Pacific Railroad Company.] 
 
 [Sec. 17 provided that the branch from Sioux City might be built by a 
 company having a line reaching that point from the east, instead of being 
 built by the Union Pacific Company, as per Section 14 of the Act of 1862. 
 
APPENDIX. 115 
 
 The bond subsidy was not to be increased by this change, and the land grant 
 was to be five alternate sections on each side of the track for each running 
 mile. Failure to complete this line within ten years of the passage of this 
 act forfeited the portion already built.] 
 
 [Secs. 18, IQ, and 20 referred to an extension of the Burlington and 
 Missouri River road westward to a junction with the Union Pacific at some 
 point east of the one-hundredth meridian.] 
 
 [Sec. 21 provided that before any lands should be given to the company 
 receiving the grant, that company should pay the cost of surveying, selecting 
 and conveying the same.] 
 
 [Sec. 22 reserved to Congress the right to alter, amend, or repeal this act.] 
 
 Approved July 2, 1864. 
 
APPENDIX II. 
 
 TABLE I. 
 FIGURES RELATING TO THE UNION PACIFIC RAILROAD COMPANY. 
 
 (see chart I.) 
 
 
 Miles 
 Operated 
 
 Earnings 
 
 Operating 
 Expenses 
 
 Taxes 
 
 Operating 
 Expenses In- 
 cluding Taxes 
 
 Surplus 
 Earnings 
 
 Ex- 
 pense 
 Ratio 
 
 i86g 
 
 1038.68 
 
 
 
 
 
 
 1870 
 
 
 $ 7,625,277.11 
 
 S4,S75,03i-36 
 
 ;?i02,383.48 
 
 84,677,414-84 
 
 fe947,86?.27 
 
 61.34 
 
 1871 
 
 
 7,521,682.16 
 
 3,310,551.55 
 
 284,015.31 
 
 3,594,466.86 
 
 3,921,115.30 
 
 47-87 
 
 1872 
 
 
 8,892,605.53 
 
 4,597,427-63 
 
 203,145.85 
 
 4,800,573.48 
 
 4,092,032.05 
 
 53-98 
 
 1873 
 
 
 10,266,103.66 
 
 4,752,838.58 
 
 222,022.44 
 
 4,974,861.02 
 
 5,291,242.64 
 
 48.46 
 
 1874 
 
 
 10,559,880.12 
 
 4,599,148.74 
 
 255,555-13 
 
 4,854,703-87 
 
 5,705,176.25 
 
 45-97 
 
 1875 
 
 
 11,993.832-09 
 
 4,710,979-10 
 
 271,068.85 
 
 4,982,047.95 
 
 7,011,784.14 
 
 41.54 
 
 1876 
 
 
 12,886,858.84 
 
 4,961,015.27 
 
 307,195.93 
 
 5,268,211.20 
 
 7,618,647.64 
 
 40.88 
 
 1877 
 
 
 12,948,477.02 
 
 5,283,129.20 
 
 286,963.50 
 
 5,570,092.70 
 
 7,199,782.17 
 
 42.88 
 
 1878 
 
 
 13,121,272.58 
 
 4,989,610.79 
 
 386,975.40 
 
 5,376,586.19 
 
 7,744,686.39 
 
 40.98 
 
 1879 
 
 1042.40 
 
 18,040,266.08 
 
 7,930,078.79 
 
 438,758-17 
 
 8,368,836.96 
 
 9,671,429.12 
 
 46-38 
 
 TABLE IL 
 FIGURES RELATING TO THE UNION PACIFIC RAILWAY COMPANY. 
 
 (see chart ii.) 
 
 Miles 
 Operated 
 
 Earnings 
 
 Operating 
 
 Expenses, not 
 
 Including Taxes 
 
 Operating Ex- 
 penses, Including 
 Taxes 
 
 Surplus 
 Earnings 
 
 Exp. 
 Ratio, 
 Taxes 
 Incl'd 
 
 881 
 882 
 
 886 
 887 
 
 890 
 891 
 892 
 893 
 894 
 
 1820.90 
 1820.90 
 1820.90 
 1820.90 
 1831.90 
 1832.45 
 1832.45 
 1824.06 
 1821.43 
 1821.36 
 1821.42 
 1821.86 
 1821.86 
 1822.39 
 1822.39 
 
 822,275,655.40 
 24,105,380.41 
 22,710,327.75 
 20,915,624.11 
 17,837,060.88 
 
 17,455,031-51 
 17,806,132.59 
 19,546,088.62 
 19,898,816.93 
 
 19,775,555-84 
 20,438,208.36 
 
 19,687,738-48 
 20,361,401.66 
 17,376,792.11 
 14,739,436.76 
 
 510,105,211.54 
 
 12,086,331.22 
 
 10,239,262.74 
 
 9,849,399-70 
 
 8,424,925-23 
 
 8,560,621.24 
 
 9,685,771.12 
 
 9,869,615.83 
 
 11,112,146.67 
 
 10,878,359.78 
 
 12,573,820.43 
 
 11,290,528.18 
 
 11,256,622.86 
 
 10,578,267.90 
 
 10,107,260.70 
 
 ;?439,907-98 
 394,011.49 
 
 487,786.54 
 505,140.80 
 470,226.24 
 489,733.96 
 
 597,654-45 
 564,585.94 
 667,202.10 
 610,516.43 
 589,628.87 
 550,758.60 
 554,510.58 
 593,807.40 
 317,098.81 
 
 116 
 
 !io,545^ 
 12,480, 
 10,727, 
 10,354 
 8,895: 
 9,050: 
 10,283, 
 
 10,434: 
 11,779: 
 
 11,488: 
 1 3, 1 63: 
 11,841, 
 
 II,8lI: 
 11,172, 
 10,424. 
 
 ,119.52 
 
 .342-71 
 ,049.28 
 ,540.50 
 ,151-47 
 
 355-20 
 .425-57 
 201.77 
 
 348-77 
 ,876.21 
 ,449.30 
 286.78 
 133.44 
 075.30 
 359.51 
 
 (",730,535.88 
 
 11,625,037.70 
 
 11,983,278.47 
 
 10,356,965.25 
 
 8,941,909.41 
 
 8,404,676.31 
 
 7,552,707.02 
 
 9,111,886.85 
 
 8,119,468.16 
 
 8,286,679.63 
 
 7,274,759.06 
 
 7,846,451.70 
 
 8,550,268.22 
 
 6,204,716.81 
 
 4,315,077.25 
 
 47.34 
 51.77 
 47.23 
 50.48 
 49.87 
 51.85 
 57.75 
 53.38 
 59.20 
 58.10 
 64.41 
 60.15 
 58.01 
 64.26 
 70.72 
 
APPENDIX. 
 
 117 
 
 TABLE III. 
 
 RELATING TO THE UNION PACIFIC RAILWAY SYSTEM. 
 
 (see chart III.) 
 
 880 
 881 
 882 
 883 
 884 
 885 
 
 886 
 887 
 
 890 
 891 
 892 
 893 
 
 Miles 
 Operated 
 
 2766.30 
 
 3125-45 
 3632.69 
 4120.65 
 4420.30 
 
 4473-95 
 4509.20 
 4822.81 
 5041.36 
 
 7389-55 
 7562.94 
 7668.35 
 
 7673-59 
 7690.57 
 
 Earnings 
 
 325,066,893.77 
 28,971,250.27 
 29,430,318.70 
 28,629,222.80 
 25,657,290.41 
 25,674,674.75 
 26,280,185.89 
 
 28,557,765-69 
 30,195,522.53 
 39,669,600.06 
 43,049,248.36 
 42,699,587.83 
 43,135,098.20 
 36,053,401.68 
 
 Operating 
 
 Expenses, not 
 
 Including Taxes 
 
 611,581, 
 15,277. 
 
 14,532; 
 
 15,057: 
 14,014, 
 15,083^ 
 16,359, 
 16,616, 
 18,476, 
 24,516, 
 
 29,343, 
 27,668, 
 27,216, 
 24,508, 
 
 ,693.91 
 ,634.82 
 ,384.94 
 ,684.15 
 ,460.40 
 ,175.25 
 ,580.23 
 761.12 
 428.04 
 ,751.40 
 961.81 
 896.35 
 
 237-23 
 884.96 
 
 Taxes 
 
 I 540,245.75 
 
 562,445.19 
 
 709,576.44 
 
 1,086,655.66 
 
 853,654.80 
 
 904,058.28 
 
 1,052,633.54 
 
 1,050,971.42 
 
 1,258,459-75 
 1,496,801.25 
 1,467,202.46 
 1,491,385.87 
 
 1,548,742.17 
 1,548,274.16 
 
 Operating Ex- 
 penses, Including 
 Taxes 
 
 ;?i2,i2i,939.66 
 15,840,080.01 
 15,241,961.38 
 16,144,339.81 
 14,868,115.20 
 
 15,987,233-53 
 17,412,413.77 
 17,667,732.54 
 
 19,734,887.79 
 26,013,552.65 
 30,811,164.27 
 29,160,282.22 
 28,764,979.40 
 26,057,159.12 
 
 Surplus 
 Earnings 
 
 $12,944 
 
 13,131: 
 
 14,188, 
 
 12,484, 
 
 10,789, 
 
 9,687, 
 
 8,867, 
 
 10,890, 
 
 10,460. 
 
 13,656, 
 
 12,238, 
 
 13,539! 
 
 14,370, 
 
 9,996, 
 
 :954-ii 
 ,170.26 
 
 357-32 
 ,882.99 
 ,175.21 
 441.22 
 
 ,972.12 
 
 033-IS 
 634-74 
 047.41 
 
 084.09 
 
 305-61 
 118.80 
 242.56 
 
 Exp. 
 Ratio, 
 Taxes 
 Incl'd 
 
 48.36 
 54-67 
 
 51-79 
 
 56.39 
 
 57-95 
 62.27 
 66.26 
 61.87 
 65-36 
 65.58 
 71-57 
 68.29 
 66.69 
 72.27 
 
 ' Owing to complications brought about by the Receivership, it was found impossible to 
 include in the statements covering the financial operations of the Union Pacific Railway 
 System the figures relating to certain lines which had previously appeared as a part of the 
 system. Since this change in the basis of the accounts destroys their value for comparison 
 with the figures of previous years, no account of the year 1894 is taken in the charts and 
 tables relating to the Union Pacific Railway System. They are easily accessible to any one 
 wishing to examine them in the annual report of the company. 
 
 The roads omitted from the accounts of 1894 are the Oregon Short Line & Utah Northern 
 Railway Co.; the Union Pacific, Denver & Gulf Railway Co.; the Union Pacific, Lincoln & 
 Colorado Railway Co.; the St. Joseph & Grand Island Railroad Co.; and the Kansas City & 
 Omaha Railroad Co. 
 
ii8 
 
 APPENDIX. 
 
 TABLE IV. 
 
 CLASSIFICATION OF EARNINGS OF THE UNION PACIFIC RAILWAY COMPANY. 
 
 (see chart IV.) 
 
 Passenger 
 
 Freight 
 
 Mail 
 
 Express 
 
 Telegraph 
 
 Miscellaneous 
 
 Total 
 
 880 
 881 
 882 
 883 
 884 
 885 
 886 
 887 
 
 S91 
 892 
 
 893 
 894 
 
 5.131^ 
 5,197^ 
 
 4,659: 
 4,212, 
 
 3,979: 
 4,160, 
 4,620, 
 4,65°: 
 4,324 
 4,224, 
 3,687: 
 3,648: 
 3,459: 
 2,436: 
 
 125.32 
 
 571-39 
 730.01 
 116.16 
 597.12 
 ,899.80 
 673.82 
 113-43 
 535-87 
 ,582.57 
 486.26 
 654.01 
 334-76 
 ,943.01 
 613.94 
 
 !l5,2i8 
 15,559: 
 13,905 
 
 12,939: 
 
 11,660, 
 12,070, 
 12,230, 
 13,436: 
 13,740: 
 13,509: 
 14,287 
 13,921 
 14,558: 
 11,780, 
 10,253, 
 
 507-49 
 ,528.42 
 ,489.63 
 540.06 
 310.63 
 
 749-15 
 ,270.56 
 ,492.60 
 293-55 
 346.17 
 575.67 
 ,636-43 
 396-71 
 390.67 
 679.70 
 
 ;»539,870.66 
 567,875-65 
 632,959.12 
 652,215.52 
 603,178.60 
 584,718.69 
 587,302.77 
 629,061.36 
 630,938.23 
 622,918.30 
 
 839,927-15 
 1,016,754.85 
 1,041,833.54 
 1,064,532.61 
 1,124,732.63 
 
 S68i,8i8.02 
 696,184.12 
 748,932.30 
 705,261.96 
 655,113.46 
 514,089.89 
 
 471,778.39 
 528,448.03 
 482,238.88 
 471,975.21 
 370,346.20 
 348,907.44 
 316,962.71 
 282,951.45 
 236,161.55 
 
 i 
 
 850,172.59 
 63,324.78 
 52,493.72 
 52,884.48 
 51,152.41 
 48,658.13 
 
 $ r 430,333.91 
 646,622.05 
 
 728,538.95 
 630,739.16 
 705,861.07 
 305,573.98 
 356,107.05 
 331,971.20 
 1394,810.40 
 796,561.00 
 652,548.30 
 660,292.03 
 742,989.46 
 737,821.96 
 639,590.81 
 
 822,275,655.40 
 24,105,380.41 
 22,710,327.75 
 20,915,624.11 
 17,837,060.88 
 
 17,455,031-51 
 17,806,132.59 
 19,546,088.62 
 19,898,816.93 
 
 19,775,555-84 
 20,438,208.36 
 
 19,687,738.48 
 20,361,401.66 
 17,376,792.11 
 14,739,436.76 
 
 TABLE V. 
 CLASSIFICATION OF EARNINGS OF THE UNION PACIFIC RAILWAY SYSTEM. 
 
 (see chart v.) 
 
 
 Passenger 
 
 Freight 
 
 Mail 
 
 Express 
 
 Telegraph 
 
 Miscellaneous 
 
 Total 
 
 1880 
 
 86,266,235.69 
 
 
 
 
 
 
 825,066,893.77 
 
 I88I 
 
 6,372,958.60 
 
 818,757,807.54 
 
 
 
 
 
 28,971,250.27 
 
 1882 
 
 6,828,520.70 
 
 18,431,555-05 
 
 8790,361-35 
 
 8893,980.26 
 
 
 8 
 
 868,636.03 
 
 29,430,318.70 
 
 1883 
 
 6,307,497-66 
 
 18,243,858.08 
 
 808,849.72 
 
 863,166.54 
 
 
 
 705,250.01 
 
 28,629,222.80 
 
 1884 
 
 6,070,906.95 
 
 17,092,927.39 
 
 852,270.80 
 
 823,693.46 
 
 
 
 817,491.81 
 
 25,657,290.41 
 
 1885 
 
 5,755,441-68 
 
 18,004,247.05 
 
 812,612.96 
 
 661,516.53 
 
 
 " ■} 
 
 440,856.53 
 
 25,674,674.75 
 
 1886 
 
 6,029,733.83 
 
 18,344,549.17 
 
 816,351.07 
 
 657,364-90 
 
 
 
 432,186.92 
 
 26,280,185.89 
 
 1887 
 
 6,595,779-54 
 
 19,956,467.00 
 
 879,296.41 
 
 714,055-36 
 
 
 
 412,167.38 
 
 28,557,765.69 
 
 1888 
 
 6,997,706.99 
 
 21,077,346.20 
 
 921,841.56 
 
 659,608.28 
 
 
 
 539,019.50 
 
 30,195,522.53 
 
 1889 
 
 8,590,324.86 
 
 28,051,716.89 
 
 1,080,883.77 
 
 756,970.48 
 
 884,110.74 
 
 1,105,593-32 
 
 39,669,600.06 
 
 1890 
 
 9,336,575-58 
 
 30,330,900.11 
 
 1,529,202.75 
 
 692,770.39 
 
 106,309.97 
 
 1,053,489.54 
 
 43,049,248.36 
 
 1891 
 
 8,484,226.68 
 
 30,550,555-29 
 
 1,758,249.83 
 
 674,517.00 
 
 96,952.57 
 
 1,135,086.46 
 
 42,699,587.83 
 
 1892 
 
 8,439,623.61 
 
 31,051,237.60 
 
 1,789,395-49 
 
 650,255.74 
 
 99,324.56 
 
 1,105,261.20 
 
 43,135,098.20 
 
 1893 
 
 7,286,617.13 
 
 25,168,689.78 
 
 1,815,772.63 
 
 573,336,55 
 
 93,230.90 
 
 1,115,754.69 
 
 36,053,401.68 
 
 ' Includes telegraph. 
 
APPENDIX. 
 
 119 
 
 TABLE VI. 
 
 FIGURES RELATING TO THE UNION PACIFIC RAILWAY COMPANY'S FREIGHT 
 
 BUSINESS. 
 
 (see chart VI.) 
 
 
 Total Tons carried i Mile 
 
 Rate, Cents per 
 Ton-Mile 
 
 Revenue 
 
 1880 
 
 
 
 ;?i5,2i8,507.49 
 
 I88I 
 
 783,331,084 
 
 1.98' 
 
 15,559,528.42 
 
 1882 
 
 732,791,054 
 
 1.89' 
 
 13,905,489-63 
 
 1883 
 
 745,989,015 
 
 1-73' 
 
 12,939,540-06 
 
 1884 
 
 797,182,908 
 
 I-5I" 
 
 11,660,310.63 
 
 1885 
 
 851,807,292 
 
 1.49 
 
 12,070,749.15 
 
 1886 
 
 966,233,577 
 
 1-443- 
 
 12,230,270.56 
 
 1887 
 
 1,107,931,910 
 
 1.276— 
 
 13,436,492.60 
 
 1888 
 
 1,216,056,130 
 
 I'I73+ 
 
 13,740,293.55 
 
 1889 
 
 1,159,338,019 
 
 1.165 
 
 13,509,346.17 
 
 1890 
 
 1,248,727,130 
 
 1. 144 
 
 14,287,575-67 
 
 1891 
 
 1,274,102,581 
 
 1. 093 
 
 13,921,636.43 
 
 1892 
 
 1,376,906,851 
 
 1.057 
 
 14,558,396.71 
 
 1893 
 
 1,199,214,386 
 
 .982 
 
 11,780,390.67 
 
 1894 
 
 1,042,493,192 
 
 •984 
 
 10,253,679.70 
 
 TABLE Vn. 
 
 FIGURES RELATING TO THE UNION PACIFIC RAILWAY SYSTEM S FREIGHT 
 
 BUSINESS. 
 
 (see chart VII.) 
 
 
 Total Tons carried 1 Mile 
 
 Rate, Cents per 
 Ton-Mile 
 
 Revenue 
 
 1880 
 
 
 
 
 I88I 
 
 839,488,339 
 
 2.23' 
 
 jSi8,757,8o7-54 
 
 1882 
 
 833,381,193 
 
 2.21' 
 
 18,431,555-05 
 
 1883 
 
 890,741,196 
 
 2.05' 
 
 18,243,858.08 
 
 1884 
 
 984,871,475 
 
 1.80' 
 
 17,092,927.39 
 
 1885 
 
 1,109,582,402 
 
 1.72' 
 
 18,004,247.05 
 
 1886 
 
 1,261,308,798 
 
 I.581+' 
 
 18,344,549-17 
 
 1887 
 
 1,490,004,636 
 
 1.422+ 
 
 19,956,467.00 
 
 1888 
 
 1,682,853,857 
 
 1-305- 
 
 21,077,346.20 
 
 1889 
 
 2,057,141,359 
 
 1-363+ 
 
 28,051,716.89 
 
 1890 
 
 2,330,147,013 
 
 1.381 
 
 30,330,900.11 
 
 I89I 
 
 2,414,693,606 
 
 1-334 
 
 30,550,555-29 
 
 1892 
 
 2,494,050,611 
 
 1. 316 
 
 31,051,237.60 
 
 1893 
 
 2,194,160,485 
 
 1. 214 
 
 25,168,689.78 
 
 'Includes coal, but excludes company freight. 
 
120 
 
 APPENDIX. 
 
 TABLE VIII. 
 
 FIGURES RELATING TO THE UNION PACIFIC RAILWAY COMPANY S PAS- 
 SENGER BUSINESS. 
 
 (see chart VIII.) 
 
 
 Total No. Passengers 
 
 Rate 
 
 Revenue 
 
 
 carried i Mile 
 
 
 
 I88I 
 
 153-570,005 
 
 3-3400 
 
 $5,131,571-39 
 
 1882 
 
 157,527,336 
 
 3.2900 
 
 5,197,730.01 
 
 1883 
 
 148,963,839 
 
 3.I210 
 
 4,659,116.16 
 
 1884 
 
 142,692,631 
 
 2.9034 
 
 4,212,597.12 
 
 1885 
 
 144,800,547 
 
 2.7485 
 
 3,979,899.80 
 
 1886 
 
 194,870,072 
 
 2.1351 
 
 4,160,673.82 
 
 1887 
 
 200,810,375 
 
 2.3007 
 
 4,620,113.43 
 
 1888 
 
 207,710,322 
 
 2.2389 
 
 4,650,535.87 
 
 1889 
 
 201,741,801 
 
 2.1440 
 
 4,324,582.57 
 
 1890 
 
 204,610,983 
 
 2.0650 
 
 4,224,486.26 
 
 I89I 
 
 171,727,025 
 
 2.1470 
 
 3,687,654.01 
 
 1892 
 
 178,983,285 
 
 2.0380 
 
 3,648,334.76 
 
 1893 
 
 177,252,384 
 
 1.9520 
 
 3,459,943.01 
 
 1894 
 
 130,636,277 
 
 •1.8650 
 
 2,436,613.94 
 
 
 TAB 
 
 LE IX. 
 
 
 FIGURES RELATING TO THE UNION PACIFIC RAILWAY SYSTEM S 
 PASSENGER BUSINESS. 
 
 
 (see chart IX.) 
 
 
 
 
 Total No. Passengers carried 
 I Mile 
 
 Rate 
 
 Revenue 
 
 1880 
 
 165,645,281 
 
 3-7835 
 
 $6,266,235.69 
 
 
 I88I 
 
 177,143,418 
 
 3.6000 
 
 6,372,958-60 
 
 
 1882 
 
 191,756,937 
 
 3.5610 
 
 6,828,520.70 
 
 
 1883 
 
 184,180,603 
 
 3-4250 
 
 6,307,497-66 
 
 
 1884 
 
 185,721,745 
 
 3.2690 
 
 6,070,906.95 
 
 
 1885 
 
 189,071,991 
 
 3.0580 
 
 5,755,441-68 
 
 
 1886 
 
 247,341,275 
 
 2.1350 
 
 6,029,733-83 
 
 
 1887 
 
 278,381,266 
 
 2.3010 
 
 6,595,779-54 
 
 
 1888 
 
 286,820,182 
 
 2.4400 
 
 6,997,706.99 
 
 
 1889 
 
 355,822,732 
 
 2.4140 
 
 8,590,324.86 
 
 
 1890 
 
 399,664,486 
 
 2.3360 
 
 9,336,575-58 
 
 
 I89I 
 
 342,481,860 
 
 2.4770 
 
 8,484,226.68 
 
 
 1892 
 
 351,909,299 
 
 2.3980 
 
 8,439,623.61 
 
 
 1893 
 
 317,631,548 
 
 2.2940 
 
 7,286,617.13 
 
 
APPENDIX. 
 
 121 
 
 TABLE X. 
 FIGURES RELATING TO UNION PACIFIC RAILROAD COMPANY'S LAND SALES. 
 
 (see chart X.) 
 
 
 Price 
 
 No. Pur- 
 chasers 
 
 Ave. No. 
 A. to Each 
 
 Total 
 Net Acreage 
 
 Total Proceeds 
 
 Expenses 
 
 Net Proceeds 
 
 To Jan. I, 1875 
 
 Ha7 
 3.66 
 
 
 
 1,082,893.36 
 111,049.55 
 
 
 
 
 187s 
 
 $ 404,462.00 
 
 
 
 1876 
 
 2.98X 
 
 
 
 125,905.21 
 
 375,540.82 
 
 
 
 1877 
 
 4.98 
 4.88X 
 
 
 
 69,015.87 
 318,903.47 
 
 343,768.02 
 1,557,082.32 
 
 
 
 1878 
 
 
 
 1879 
 
 4. 141 
 
 
 
 243,337.31 
 
 1,007,855.63 
 882,656.22 
 
 
 
 1880 
 
 4.824 
 
 1,922 
 
 91.68 
 
 143,483.45 
 
 ^213,309. 48 
 
 ^669,346.74 
 
 1881 
 
 4.938 
 
 1,075 
 
 89.36 
 
 62,406.09 
 
 571,807.04 
 
 214,893.40 
 
 356,913.64 
 
 1882 
 
 4.28 
 
 2,406 
 
 121.43 
 
 195,248.32 
 
 1,155,694.81 
 
 245,010.92 
 
 910,683.89 
 
 1883 
 
 3-II 
 
 2,606 
 
 303.03 
 
 805,833.54 
 
 2,759,130.64 
 
 232,763.86 
 
 2,526,366.78 
 
 1884 
 
 1.52 
 
 1,517 
 
 263.60 
 
 4,321,042.98 
 
 6,944,757.17 
 
 345,630.33 
 
 6,599,126.84 
 
 1885 
 
 1. 65 
 
 392 
 
 1903.00 
 
 743,704.18 
 
 1,915,963.47 
 
 95,307-67 
 
 1,820,655.80 
 
 1886 
 
 1.22 
 
 26 
 
 5634.62 
 
 146,189.22 
 
 996,413.96 
 
 65,122.23 
 
 931,291.73 
 
 1887 
 
 1.44 
 
 125 
 
 410.82 
 
 43,297.90 
 
 752,591.43 
 
 9,541.04 
 
 743,050.39 
 
 1888 
 
 3-91 
 
 77 
 
 240.33 
 
 '17,225.56 
 
 619,651.00 
 
 3,020.52 
 
 616,630.48 
 
 1889 
 
 2.20 
 
 144 
 
 728.79 
 
 37,987.56 
 
 573,453.29 
 
 1,037,647.69 
 
 "464,194,40 
 
 1890 
 
 1.72 
 
 151 
 
 1084.91 
 
 ^2,00 1. 1 4 
 
 472,315.80 
 
 281,095.11 
 
 191,220.69 
 
 1891 
 
 1.83 
 
 141 
 
 667.82 
 
 61,074.52 
 
 346,504.07 
 
 61,068.31 
 
 285,435.76 
 
 1892 
 
 2.50 
 
 164 
 
 999.62 
 
 '310,739.44 
 
 ' 9,992.64 
 
 73,750.79 
 
 "83,743.43 
 
 1893 
 
 2.88 
 
 133 
 
 666.60 
 
 '14,535.50 
 
 185,452.35 
 
 19,451.02 
 
 166,001.33 
 
 1894 
 
 2.31 
 
 57 
 
 426.98 
 
 '32,382.22 
 
 59,926.54 
 
 157,585.65 
 
 "97,659.11 
 
 TABLE XL 
 
 TABLE RELATING TO KANSAS PACIFIC LAND SALES. 
 
 (see chart XI.) 
 
 
 Price 
 
 No. Pur- 
 chasers 
 
 Averag^e No. 
 A. to Each 
 
 Total Net 
 Acreage 
 
 Total Proceeds 
 
 Expenses 
 
 Net Proceeds 
 
 1880 
 
 «4-03I 
 
 621 
 
 161.65 
 
 75,187.68 
 
 8410,422.51 
 
 8142,005.19 
 
 8268,417.32 
 
 I88I 
 
 4.282 
 
 457 
 
 217.68 
 
 76,980.86 
 
 445,958.00 
 
 132,945.39 
 
 313,012.61 
 
 1882 
 
 4-93 
 
 656 
 
 161.46 
 
 63,647-55 
 
 469,923-51 
 
 148,032.65 
 
 321,890.86 
 
 1883 
 
 4.415 
 
 1,208 
 
 247.00 
 
 218,885.71 
 
 1,135,752-47 
 
 187,338.82 
 
 948,413-65 
 
 1884 
 
 4-215 
 
 1,396 
 
 234.00 
 
 452,566.03 
 
 2,076,579.21 
 
 245,029.44 
 
 1,831,549.77 
 
 1885 
 
 4.08 
 
 1,740 
 
 231.00 
 
 690,294.91 
 
 3,070,831.81 
 
 458,575.47 
 
 2,612,256.34 
 
 1886 
 
 4.68 
 
 644 
 
 357.74 
 
 225,623.21 
 
 1,341,348-09 
 
 83,699-76 
 
 1,257.648.33 
 
 1887 
 
 4-93 
 
 2,017 
 
 259.05 
 
 511,169.77 
 
 2,798,605.26 
 
 160,964.83 
 
 2,637,640.43 
 
 1888 
 
 5-59 
 
 516 
 
 298.10 
 
 121,596.52 
 
 994,703-59 
 
 217,184-79 
 
 777,518.80 
 
 1889 
 
 4-94 
 
 251 
 
 279-79 
 
 59,728.49 
 
 575,265.54 
 
 257,502.21 
 
 317,763-33 
 
 1890 
 
 7-17 
 
 130 
 
 221.26 
 
 17,449.79 
 
 372,905.71 
 
 262,989.44 
 
 109,916.27 
 
 I89I 
 
 6.64 
 
 112 
 
 191.00 
 
 2,420.83' 
 
 384,166.03 
 
 251,718.05 
 
 132,477.98 
 
 1892 
 
 6.37 
 
 314 
 
 184.42 
 
 10,654.03' 
 
 220,083.91 
 
 241,680.46 
 
 21,596.55' 
 
 1893 
 
 5.52 
 
 216 
 
 262.46 
 
 7,689.42" 
 
 142,331.13 
 
 186,464.16 
 
 44,133.03' 
 
 1894 
 
 7-63 
 
 64 
 
 122.38 
 
 4,033.81 
 
 95,179-30 
 
 155,840.43 
 
 60,661. 13 = 
 
 ' Excess of cancellations over sales. ^ Deficit. 
 
122 
 
 APPENDIX. 
 
 TABLE XII. 
 
 FIGURES RELATING TO UNION PACIFIC RAILROAD COMPANY'S COAL 
 
 BUSINESS. 
 
 (see chart XII.) 
 
 
 Tons 
 
 Cost 
 
 Price 
 
 Proiit 
 
 Net Earnings 
 
 
 Mined P 
 
 er Ton 
 
 Per Ton 
 
 Per Ton 
 
 Coal Department 
 
 1875 
 
 208,222 $1 
 
 88 
 
 
 
 
 1876 
 
 264,771 I 
 
 4I| 
 
 
 
 
 1877 
 
 275,480 I 
 
 I3i 
 
 
 
 
 1878 
 
 275,795 I 
 
 04i 
 
 * 
 
 
 
 1879 
 
 340,152 I 
 
 06J 
 
 
 
 
 i88o 
 
 445,129 I 
 
 76 
 
 $1.69 
 
 S.07' 
 
 85,978.24 = 
 
 1881 
 
 587,493 I 
 
 69I 
 
 i.ni 
 
 •oii 
 
 59,045-07 
 
 1882 
 
 738,210 I 
 
 64I 
 
 i.59i 
 
 •05P 
 
 33,402.65 ' 
 
 1883 
 
 776,559 I 
 
 4i| 
 
 i.53i 
 
 ■Hi 
 
 170,332.44 
 
 1884 
 
 882,608 I 
 
 3ii 
 
 i.46i 
 
 .141 
 
 198,592-13 
 
 1885 
 
 817,114 I 
 
 38 
 
 1.51 
 
 •13 
 
 106,555.02 
 
 1886 
 
 784,587 I 
 
 48 
 
 i.6oi 
 
 ■12i 
 
 96,010.35 
 
 1887 
 
 1,009,249 I 
 
 I4l 
 
 i.36f 
 
 .22| 
 
 226,451.84 
 
 1888 
 
 1,134,382 I 
 
 18A 
 
 I-33I 
 
 •MtV 
 
 166,419.66 
 
 1889 
 
 1,050,074 I 
 
 59f 
 
 1-54* 
 
 •04I' 
 
 47,923.62 = 
 
 1890 
 
 1,268,118 I 
 
 44A 
 
 i4Si 
 
 .oof 
 
 75,434-16 
 
 1891 
 
 1,535,045 I 
 
 17A 
 
 1 .351 
 
 •I8A 
 
 340,758-13 
 
 1892 
 
 1,651,897 I 
 
 09I 
 
 1.29A 
 
 .20^ 
 
 422,906.01 
 
 1893 
 
 1,505,861 1 
 
 13I 
 
 I-35A 
 
 .2li 
 
 413,090.01 
 
 1894 
 
 1,299,008 I 
 
 05A 
 
 I-3IA 
 
 .26 
 
 421,195.02 
 
 ' Loss. 
 
 = Deficit. 
 
TABLE XIII. 
 FIGURES RELATING TO THE BONDED INDEBTEDNESS OF THE UNION PACIFIC RAILWAY COMPANY. 
 
 Union Pacific Railroad Comvany. 
 
 First Mortgage Bonds 
 
 Land Grant Bonds 
 
 Sinking Fund Coupon Bond s 
 
 Sinking Fund Registered Bonds 
 
 Omaha Bridge Bonds 
 
 Collateral Trust 6 per cent. Bonds 
 
 Kansas Pacific Railway Company. 
 
 Eastern Division Bonds 
 
 Middle Division Bonds 
 
 Denver Extension Bonds 
 
 Leavenworth Branch Bonds 
 
 Consolidated Mortgage Bonds 
 
 Certificates for Consolidated Mortgage Bonds . 
 
 Income Bonds 
 
 Income (subordinated) Bonds 
 
 ^heyenne Branch Bonds 
 
 First Land Grant Bonds 
 
 Second Land Grant Bonds 
 
 Funding Bonds 
 
 Eastern Division Coupon Certificates 
 
 Middle Division Coupon Certificates 
 
 Denver Extension Coupon Certificates 
 
 Leavenworth Branch Coupon Certificates 
 
 First Land Grant Coupon Certificates 
 
 Second Land Grant Coupon Certificates 
 
 Denver Pacific Railway and Telegraph 
 
 Union Pacific Railway Company. 
 
 Trust 5 per cent. Bonds 
 
 Trust 5 per cent. Bonds, registered 
 
 Omaha Bridge Renewal Bonds 
 
 Equipment Trust Bonds, Series A 
 
 Equipment Trust Bonds, Series B 
 
 , Equipment Trust ^% per cent. Bonds, Series C . 
 Collateral Trust 4)^ per cent. Bonds 
 
 Collateral Trust 6 per cent. Notes 
 
 Total . 
 
 1880 
 
 ?27, 229,000.00 
 
 6,071,000.00 
 
 13,124,000.00 
 
 737,000.00 
 
 2,037,000.00 
 
 4,691,000.00 
 
 2,240, 
 
 4,o63: 
 
 6,366, 
 
 600, 
 
 12,602, 
 
 I 
 
 263, 
 
 4,011 
 
 ,000.00 
 000.00 
 ,000.00 
 ,000.00 
 000.00 
 021.60 
 ,700.00 
 ,650.00 
 
 1,480, 
 161, 
 
 1,500, 
 297, 
 541, 
 
 1,000, 
 
 92, 
 
 246, 
 
 161, 
 
 2,127, 
 
 750.00 
 595.00 
 000.00 
 780.00 
 050.00 
 895.00 
 417.50 
 765.12 
 595.00 
 000.00 
 
 ;?92,984,624.72 
 
 1881 
 
 f27, 229,000.00 
 5,384,000.00 
 12,715,000.00 
 1,146,000.00 
 1,960,000.00 
 5,060,000.00 
 
 2,240,000.00 
 4,063,000.00 
 6,366,000.00 
 
 100,000.00 
 
 14,450,005.00 
 
 76,050.00 
 975,250.00 
 
 52,500.00 
 
 1,000.00 
 
 540.00 
 
 3,645-00 
 
 126,402.50 
 
 36,067.50 
 
 2,913-75 
 
 1,575-00 
 82,000.00 
 
 $82,070,948.75 
 
 1882 
 
 $27,229,000.00 
 4,670,000.00 
 12,613,000.00 
 1,248,000.00 
 1,888,000.00 
 4,918,000.00 
 
 2,240,000.00 
 
 4,063,000.00 
 
 6,323,000.00 
 
 67,000.00 
 
 15,640,005.00 
 
 76,050.00 
 
 806,350.00 
 
 47,000.00 
 
 1,000.00 
 
 405.00 
 
 4,567-50 
 9,870.00 
 1,260.05 
 
 ii,845,507-55 
 
 ?27, 229,000. 00 
 4,589,000.00 
 12,115,000.00 
 1,746,000.00 
 1,805,000.00 
 4,788,000.00 
 
 2,240,000.00 
 
 4,063,000.00 
 
 6,307,000.00 
 
 35,000.00 
 
 15,775,005.00 
 
 48,350.00 
 
 715,750.00 
 
 43,000.00 
 
 2,397-50 
 4,830.00 
 
 2,980,000.00 
 20,000.00 
 
 ,506,332.50 
 
 1884 
 
 $27,229,000 
 3,360,000 
 12,703,000 
 1,918,000 
 1,716,000 
 4,662,000 
 
 2,240,000 
 
 4,063,000 
 
 6,279,000 
 
 32,000 
 
 15,927,005 
 
 48,350 
 
 260,050 
 
 11,000 
 
 i,.365 
 4,515 
 
 3,704,000 
 15,000 
 
 $84,173,285 
 
 1885 
 
 ^27, 229,000.00 
 2,706,000.00 
 12,554,000.00 
 1,929,000.00 
 1,621,000.00 
 4,541,000.00 
 
 2,240,000.00 
 
 4,063,000.00 
 
 6,258,000.00 
 
 18,000.00 
 
 14,905,005.00 
 
 45,950.00 
 
 63,250.00 
 
 8,000.00 
 
 962.50 
 4,515-00 
 
 3,707,000.00 
 64,000.00 
 
 31,957,682.50 
 
 527,229,000.00 
 2,056,000.00 
 12,377,000.00 
 1,971,000.00 
 1,519,000.00 
 4,423,000.00 
 
 2,240,000.00 
 
 4,063,000.00 
 
 6,242,000.00 
 
 18,000.00 
 
 14,855,000.00 
 
 45,950.00 
 
 63,250.00 
 
 8,000.00 
 
 385.00 
 542.50 
 
 4,552,000.00 
 
 15,000.00 
 
 291,000.00 
 
 51,969,127.50 
 
 $27,229,000 
 1,130,000 
 12,224,000 
 1,993,000 
 1,410,000 
 4,309,000 
 
 2,240,000 
 
 4,063,000 
 
 6,131,000 
 
 18,000 
 
 13,655,000 
 
 45,950 
 
 63,250 
 
 8,000 
 
 385 
 70 
 
 5,432,300 
 
 18,000 
 
 211,000 
 
 80,180,65s 
 
 ^27,229,000 
 
 624,000 
 
 11,789,000 
 
 2,426,000 
 
 1,293,000 
 
 4,197,000 
 
 2,240,000 
 
 4,063,000 
 
 6,037,000 
 
 18,000 
 
 13,038,000 
 
 45,950 
 
 6.3,250 
 
 8,000 
 
 38s 
 70 
 
 5,299,000 
 
 18,000 
 
 328,000 
 
 645,000 
 
 1,098,000 
 
 $80,459,000 
 
 $27,229,000 
 10,000 
 8,286,000 
 5,817,000 
 1,167,000 
 4,088,000 
 
 2,240,000 
 
 4,063,000 
 
 6,014,000 
 
 1 8,000 
 
 12,871,000 
 
 45,950 
 
 63,250 
 
 8,000 
 
 385 
 
 5,173,000 
 
 18,000 
 
 454,000 
 
 573,000 
 
 1,894,000 
 
 2,058,000 
 
 80,090,585 
 
 1890 
 
 $27,229,000 
 
 10,000 
 
 5,917,000 
 
 673,000 
 
 1,032,000 
 
 3,983,000 
 
 2,240,000 
 
 4,063,000 
 
 5,887,000 
 
 18,000 
 
 12,570,000 
 
 22,500 
 
 19,000 
 
 4,000 
 
 385 
 
 5,054,000 
 
 18,000 
 
 589,000 
 
 502,000 
 
 1,684,000 
 389,000 
 
 2,065,000 
 
 $73,968,885 
 
 1891 
 
 $27,229,000 
 
 9,000 
 
 5,427,000 
 
 608,000 
 
 882,000 
 
 3,879,000 
 
 2,240,000 
 
 4,063,000 
 
 5,886,000 
 
 18,000 
 
 12,470,000 
 
 21,250 
 
 19,000 
 
 4,000 
 
 385 
 
 4,921,000 
 
 18,000 
 
 589,000 
 
 430,000 
 
 1,473,000 
 
 1,814,000 
 18,293,000 
 
 $90,293,635 
 
 1892 
 
 $27,229,000 
 
 8,000 
 
 4,721,000 
 
 455,000 
 
 728,000 
 
 3,775,000 
 
 2,240,000 
 
 4,063,000 
 
 5,887,000 
 
 15,000 
 
 11,720,000 
 
 21,250 
 
 14,550 
 
 4,000 
 
 385 
 
 4,790,000 
 
 18,000 
 
 589,000 
 
 358,000 
 
 1,263,000 
 
 1,800,000 
 15,793,000 
 
 $85,492,185 
 
 1893 
 
 1894 
 
 $27,229,000 
 
 7,000 
 
 3,507,000 
 
 275,000 
 
 561,000 
 
 3,658,000 
 
 2,240,000 
 
 4,063,000 
 
 5,887,000 
 
 15,000 
 
 11,720,000 
 
 9,850 
 
 20,550 
 
 4,000 
 
 4,660,000 
 
 17,000 
 
 589,000 
 
 287,000 
 
 1,052,000 
 
 1,793,000 
 10,861,000 
 
 $78,469,785 
 
 ^27,229,000 
 
 7,000 
 
 3,475,000 
 
 272,000 
 
 382,000 
 
 3,672,000 
 
 2,240,000 
 
 4,063,000 
 
 5,887,000 
 
 15,000 
 
 11,720,000 
 
 9,850 
 
 20,550 
 4,000 
 
 4,660,000 
 
 17,000 
 
 589,000 
 
 287,000 
 
 1,052,000 
 
 1,793,000 
 10,851,000 
 
 $78,231,785 
 
APPENDIX. 
 
 123 
 
 TABLE XIV. 
 CLASSIFICATION OF EARNINGS OF THE UNION PACIFIC RAILROAD COMPANY. 
 
 
 Passenger 
 
 Freight 
 
 Mail 
 
 Express 
 
 Miscellaneous 
 
 1870 
 
 $3,818,627.55 
 
 $3,058,514.71 
 
 $274,513.58 
 
 $281,691.76 
 
 $191,929.53 
 
 I87I 
 
 4,123,510.08 
 
 3,629,488.94 
 
 283,748.80 
 
 307,731.32 
 
 177,203.02 
 
 1872 
 
 3,370,312.41 
 
 4,768,419.07 
 
 283,855.00 
 
 336,333.35 
 
 133,685.70 
 
 1873 
 
 3,887,204.48 
 
 5,516,907.58 
 
 283,855.00 
 
 410,190.76 
 
 167,945.84 
 
 1874 
 
 3,952,858.55 
 
 5,664,731-33 
 
 345,758.00 
 
 381,303-77 
 
 215,228.47 
 
 187s 
 
 4,346,014.34 
 
 6,641,512.27 
 
 325,143.00 
 
 444,174.23 
 
 236,988.25 
 
 1876 
 
 4,307,602.53 
 
 7,304,123.50 
 
 574,139-00 
 
 502,738.42 
 
 198,255.39 
 
 1877 
 
 3,599,756.87 
 
 7,597,680.53 
 
 596,775.00 
 
 430,791.98 
 
 248,199.48 
 
 1878 
 
 3,190,369.72 
 
 8,500,955-76 
 
 596,775.00 
 
 491,145.79 
 
 342,026.31 
 
 1879 
 
 3,207,909.92 
 
 8,692,414.24 
 
 596,775-00 
 
 360,840.90 
 
 343,137.60 
 
 TABLE XV. 
 EARNINGS AND EXPENSES OF THE UNION PACIFIC RAILROAD COMPANY. 
 
 EARNINGS. 
 
 1878 
 
 1879 
 
 1880 
 
 Passengers — Cash 
 
 Passengers — Government 
 
 Freight — Cash 
 
 Freight — Government 
 
 Freight — Company 
 
 Mail 
 
 Express 
 
 Miscellaneous 
 
 $ 2,926,543-73 
 223,865.11 
 7,200,556.52 
 294,414.10 
 800,907.27 
 596,775.00 
 488,645.92 
 589,564.93 
 
 $ 4,236,869.71 
 169,927.63 
 10,572,805.11 
 443,435.46 
 1,051,154.69 
 685,712.70 
 496,218.28 
 384,142.50 
 
 $5,171,114.97 
 
 234,010.35 
 
 13,406,910.18 
 
 469,025.04 
 
 1,342,572.27 
 
 719,349.84 
 681,818.02 
 430,331.91 
 
 Total 
 
 $13,121,272.58 
 
 $18,040,226.08 
 
 $22,455,134.58 
 
 EXPENSES. 
 
 Conducting Transportation 
 
 Motive Power 
 
 Maintenance of Cars 
 
 Maintenance of Way 
 
 Renewal of Rails 
 
 $ 912,161.57 
 
 1,693,721.54 
 
 443,760.66 
 
 1,513,005.48 
 
 607,537.40 
 206,399.54 
 
 $1,555,833-38 
 
 2,706,055.53 
 
 639,091.10 
 
 1,701,535-55 
 816,853-62 
 910,709.61 
 438,758.17 
 
 $2,132,692.47 
 
 3,583,453-72 
 
 841,417.08 
 
 1,964,772.72 
 
 1,109,676.57 
 
 General Expenses 
 
 473,198.98 
 
 Taxes 
 
 439,907.98 
 
 Total 
 
 5,475,503-44 
 
 8,368,836.96 
 
 10,545,119.52 
 
 Surolus EaminETS 
 
 $7,744,686.39 
 40.98 
 
 $9,671,429.12 
 46.38 
 
 $11,910,015.06 
 
 Expenses, ratio per cent 
 
 46.96 
 
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TABLE XVII. 
 EXPENSES OF THE UNION PACIFIC RAILWAY COMPANY. 
 
 
 1880' 
 
 1881 
 
 1882 
 
 1883 
 
 1884 
 
 1885 
 
 1886 
 
 1887 
 
 1888 
 
 1889 
 
 1890 
 
 1891 
 
 1892 
 
 1893 
 
 1894 
 
 
 $ 2,134,357.59 
 
 3,583.453-72 
 
 839,751-96 
 
 3,074,449.29 
 
 $ 2,482,587.56 
 
 4,073,043-19 
 1,112,862.52 
 
 3,879,497-32 
 
 $ 2,392,498.72 
 3,775,888.47 
 
 957,943-44 
 2,638,635.14 
 
 $ 2,596,230.38 
 
 3,778,344-59 
 848,062.73 
 
 1,845,961.85 
 249,115.28 
 531,684-87 
 
 $ 2,772,468.26 
 2,868,119.66 
 
 738,474-35 
 
 1,498,771.83 
 
 196,275.46 
 
 350,815.67 
 
 $ 2,791,857.68 
 
 2,804,346.42 
 
 799,454-42 
 
 1,557,022.65 
 
 212,004.85 
 
 395,935-22 
 
 $ 3,064,927.10 
 
 3,099,757-17 
 960,847.09 
 
 1,963,076.98 
 286,436.46 
 310,726.32 
 
 $ 3,294,699.94 
 
 3,410,503.81 
 
 1,022,950.42 
 
 1,531,245.89 
 
 106,091.44 
 
 504,124-33 
 
 $ 3,577,685-70 
 
 3,943,660.07 
 
 1,269,061.47 
 
 1,590,468.01 
 
 228,174.11 
 
 503,097.31 
 
 $ 3.693.630-26 
 
 3.785.997-21 
 
 1,350,092.05 
 
 1,512,885.74 
 
 134,160.80 
 
 401,593-72 
 
 $ 4,506,648.91 
 4,210,849.95 
 1,598,184.71 
 
 1.586,535-53 
 232,182.39 
 
 439,418-94 
 
 $ 4,051,868.98 
 3,710,851.15 
 1,560,151.59 
 1,525,843.17 
 
 37,774-13 
 404,039.16 
 
 $ 4,177,621.22 
 
 3,634,589-43 
 
 1,485,566.87 
 
 1,416,382.81 
 
 196,170.73 
 
 346,291.80 
 
 $ 3,858,808.59 
 
 3,542,536-94 
 
 1,370,119.07 
 
 1,314,316.23 
 
 134,436.82 
 
 358,050.25 
 
 $ 3,278,335-15 
 3,512,985.37 
 1,140,106.16 
 1,410,482.91 
 
 374,523-77 
 390,827.34 
 
 Motive Power . . . 
 
 Maintenance of Cars 
 
 
 
 General Exoenses 
 
 
 
 
 
 
 
 
 
 
 
 
 
 $ 8,424,925.23 
 
 $ 8,560,621.24 
 
 $ 9,685,771.12 
 
 $ 9,869,615.83 
 
 $11,112,146.67 
 
 $10,878,359.78 
 
 $12,573,820.43 
 
 $11,290,528.18 
 
 $11,256,622.86 
 
 $10,578,267.90 
 
 $10,107,260.70 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 $ 8,786,670.26 
 667,202.10 
 
 $ 8,897,196.06 
 610,516.43 
 
 $ 7,864,387.93 
 589,628.87 
 
 $ 8,397,210.30 
 550,758.60 
 
 $ 9,104,778.80 
 554,510-58 
 
 $ 6,798,524.21 
 593,807.40 
 
 $ 4,623,176.06 
 317,098.81 
 
 Taxes 
 
 
 
 
 505,140.80 
 
 470,226.24 
 
 489,733-96 
 
 597,654-45 
 
 564,585.94 
 
 
 
 
 
 
 $11,910,015.06 
 
 $11,778,474.39 
 
 $12,096,834.96 
 
 $10,648,001.28 
 
 $ 8,941,909.41 
 
 $ 8,404,676.31 
 
 $ 7,552,707-02 
 
 $ 9,111,886.85 
 
 $ 8,119,468.16 
 
 $ 8,286,679.63 
 
 $ 7,274,759.06 
 
 $ 7,846,451.70 
 
 $ 8,550,268.22 
 
 $ 6,204,716.81 
 
 $ 4,315,077-25 
 
 Miles Operated (average) 
 
 Expense Ratio (including Taxes) 
 
 $1,820.90 
 46.96 
 
 $1,820.90 
 51-45 
 
 $1,820.90 
 47.00 
 
 $1,820.90 
 49-30 
 
 $1,831.90 
 49-87 
 47-23 
 
 $1,832.45 
 
 51-85 
 49.04 
 
 $1,832.45 
 57-75 
 54.40 
 
 $1,824.06 
 53-38 
 50.49 
 
 $1,821.43 
 59-20 
 55-84 
 
 $1,821.36 
 58.10 
 55-01 
 
 $1,821.42 
 64.41 
 61.52 
 
 $1,821.86 
 60.15 
 
 57-35 
 
 $1,821.86 
 58.01 
 55-29 
 
 $1,822.39 
 64.29 
 60.88 
 
 $1,822.59 
 70.71 
 68.57 
 
 
 
 
 
 
 TABLE XVIII. 
 EXPENSES OF THE UNION PACIFIC RAILWAY SYSTEM. 
 
 
 i88o' 
 
 i88r 
 
 1882 
 
 1883 
 
 1884 
 
 1885 
 
 1886 
 
 1887 
 
 1888 
 
 1889 
 
 1890 
 
 1891 
 
 1892 
 
 1893 
 
 Conducting Transportation 
 
 Motive Power 
 
 Maintenance of Cars 
 
 $ 2,484,491.90 
 
 4,072,993-65 
 
 935,343-58 
 
 3,584,381.17 
 
 $ 3,132,367.34 
 5,181,760.55 
 1,420,468.82 
 4,931,266.95 
 
 $ 3,292,571.17 
 5,225,352.21 
 1,434,656.85 
 4,030,827.51 
 
 $ 3,736,138.14 
 
 5,712,774-80 
 
 1,245,125.21 
 
 3,332,008.80 
 
 399,861.27 
 
 631,775.93 
 
 $ 4,156,168.85 
 
 5,009,270.83 
 
 1,131,285.97 
 
 3,069,508.58 
 
 248,722.79 
 
 399,503.38 
 
 $ 4,499,818.18 
 
 5,364,600.58 
 
 1,203,871.61 
 
 3,210,539.06 
 
 323,616.86 
 
 480,728.96 
 
 $ 4,871,101.01 
 5,352,368.54 
 1,426,861.56 
 
 3.74S.635-74 
 590,860.76 
 372,752.62 
 
 $ 5,156,531-94 
 
 5,913,282.84 
 
 1,490,709.62 
 
 3,146,948.12 
 
 256,551.56 
 
 652,737.04 
 
 $ 5,620,244.94 
 
 6,597,424.58 
 
 1,772,765.88 
 
 3,427,586.79 
 
 404,705.36 
 
 653,700.49 
 
 $ 7,876,075.25 
 
 8,&S8,6i8.89 
 
 2,357,295.89 
 
 4,552,778.27 
 
 243,541.59 
 
 798,441.51 
 
 $ 9,781,679.50 
 
 10,210,675.41 
 
 2,884,756.74 
 
 5,049,190.88 
 
 551,655.72 
 
 866,003.56 
 
 $ 9,129,102.68 
 
 9,467,518.34 
 
 2,873,264.91 
 
 5,267,670.86 
 
 181,564.58 
 
 740,774-98 
 
 $ 9,313,278.56 
 
 9,242,457-28 
 
 2,690,270.91 
 
 4,941,036.76 
 
 371,458.41 
 
 657,735-31 
 
 $ 8,337,554.82 
 
 8,265,916.95 
 
 2,418,282.92 
 
 4,506,679.71 
 
 326,327.45 
 
 654,123.21 
 
 
 General Expenses 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 $18,476,428.04 
 
 $24,516,751.40 
 
 $29,343,691.81 
 
 $27,668,896.35 
 
 $27,216,237.23 
 
 $24,508,884.96 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 $11,719,094.49 
 1,258,459.75 
 
 $15,152,848.66 
 1,496,801.25 
 
 $13,705,286.55 
 1,467,202.46 
 
 $15,030,691.48 
 1,491,381.87 
 
 $15,918,860.97 
 1,548.742.17 
 
 $11,544,516.72 
 1,548,274.16 
 
 Taxes 
 
 
 
 
 841,717.64 
 
 853,654.80 
 
 904,058.28 
 
 1,052,633.54 
 
 1,231,420.36 
 
 
 
 
 
 Surplus Earnings (Taxes deducted) . . . 
 
 $13,124,433.29 
 
 $13,284,606.95 
 
 $14,301,913.81 
 
 $12,816,738.68 
 
 $10,789,175.21 
 
 $ 9,687,441.22 
 
 $ 8,867,972.12 
 
 $10,890,033.15 
 
 $10,460,634.74 
 
 $13,656,047.41 
 
 $12,238,084.09 
 
 ^i3,539,.309-6i 
 
 $14,370,118.80 
 
 $ 9,996,242.56 
 
 Miles Ooerated faveratre^ 
 
 $2,766.30 
 
 ^3,125-45 
 
 fe632.59 
 
 $4,120.65 
 
 $4,420.30 
 57-95 
 
 $4,473-95 
 62.27 
 
 $4,509.20 
 66.26 
 
 $4,622.81 
 61.87 
 
 $5,041.36 
 65.36 
 61.19 
 
 57,389.55 
 65.58 
 61.80 
 
 $7,562.49 
 
 71.57 
 68.16 
 
 $7,668.35 
 68.29 
 64.80 
 
 ^7,673.59 
 66.69 
 63.10 
 
 $7,690.57 
 72.27 
 67.98 
 
 Expense Ratio {including Taxes) 
 
 Expense Ratio (excluding Taxes) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 ' Statement for January not included. 
 
INDEX. 
 
 Adams, Charles Francis, becomes presi- 
 dent of the Union Pacific Railway Co.; 
 letter in the Boston Advertiser, 6 1 ; 
 offers to settle with Government, 96. 
 
 Affairs of the Union Pacific Railroad Co., 
 
 17- 
 Alley, John B., one of the seven trustees, 
 
 31- 
 
 Amendments to Act of 1862, 15. 
 
 Ames, Frederick L., holdings of Union 
 Pacific and Kansas Pacific stock in 
 1880, 60; estate of, and receivership, 
 98. 
 
 Ames, Oakes, member of House Com- 
 mittee on Railroads, 20 ; contract, 30 ; 
 and Sioux City and Pacific, 38 ; testi- 
 mony concerning, before Wilson and 
 Poland Committees, 77 ; report and 
 recommendations of Poland Committee 
 concerning, 78. 
 
 Ames, Oliver, becomes interested in Union 
 Pacific, 20 ; director of Union Pacific, 
 24; one of the seven trustees, 31 ; and 
 Central Branch, 51- 
 
 Anderson, E. Ellery, receiver, 98. 
 
 Arbitrary, 65. 
 
 Atchison and Denver Railroad, 51. 
 
 Atchison and Pike's Peak Railroad, 48. 
 
 Atchison, Colorado and Pacific Railroad, 
 
 51- 
 Atchison, Jewell County and Western 
 
 Railroad, 51- 
 Atchison, Republican Valley and Pacific 
 
 Railroad, 51. 
 Atchison, Solomon Valley and Denver 
 
 Railway, 51. 
 Atchison, Topeka and Santa F^, 61, 93. 
 Atkins, Elisha, holdings of Union Pacific 
 
 and Kansas Pacific stock in 1880, 60. 
 
 Baker, E. H., holdings of Union Pacific 
 
 and Kansas Pacific stock in 1880, 60. 
 Bates, Benjamin E., one of the seven 
 
 trustees, 31, 
 Belmont, August, 18. 
 Black Hills, route found by way of, 29. 
 Blair, John I., 38. 
 Blame for excessive cost of Union Pacific, 
 
 34- 
 Bond subsidy, ;J6 1,000,000, 1$. 
 Boomer, L. B., of Chicago, and contract, 
 
 24. 
 
 Breeze, Senator, introduces bill to carry 
 
 out Whitney's plan, 3. 
 Brice, Calvin S., 98. 
 
 Bright, Senator, and committee report, 8. 
 Brooks, James, 78. 
 Burnetizing ties, 20. 
 Bushnell, C. S., of New Haven, 18, 21 ; 
 
 purchases a construction company 
 
 charter, 21 ; sale of securities by, 27 ; 
 
 one of the seven trustees, 31. 
 Butler, General Benjamin F., and tripartite 
 
 agreement, 31. 
 
 Calhoun, John C, favorable to project, 8. 
 Capital back of the seven trustees, 32. 
 Capitalization of Union Pacific Railroad 
 
 Co., 35- 
 Capital of Union Pacific Railway Co. in 
 
 1880, 59. 
 Cars and materials of Union Pacific sold 
 
 to raise funds, 18. 
 Carver, Captain Jonathan, I. 
 Central Branch Union Pacific, history of, 
 
 48-52. 
 Central Pacific, 9. 
 Central Pacific Railroad Co. of California, 
 
 13; organized in 1861, 17; outline of 
 
 history of, 38-9. 
 
 125 
 
126 
 
 INDEX. 
 
 Chart showing contracts for building 
 
 Union Pacific, 33. 
 Chase, Salmon P., author of first measure 
 
 to aid Pacific railway, 8. 
 Cheyenne Pass, 29. 
 Chicago and Northwestern Railway 
 
 reaches Omaha, 13 ; controls Sioux 
 
 City and Pacific, 38. 
 Chicago, Burlington and Quincy, 51. 
 Chicago, Rock Island and Pacific, 51. 
 Cisco, J. J., of New York, Treasurer of 
 
 Union Pacific Railroad Co., 18. 
 Clark, S. H. H., receiver of Union Pacific, 
 
 98. 
 Clarke, Horace F., opinion of Ames con- 
 tract, 31 ; buys Union Pacific stock, 55 ; 
 
 death and sale of stock, 55. 
 Clarke, Lewis and, expedition, 2. 
 Coal business of Union Pacific Railroad 
 
 Co., 90. 
 Comparison of values of Union Pacific 
 
 and Kansas Pacific, 56. 
 Completion of road, 74. 
 Consolidation of 1880, 59; effect, and 
 
 profit to directors of Union Pacific and 
 
 Kansas Pacific, 60. 
 Construction companies, 21; of Central 
 
 Pacific, 39 ; defined, 54- 
 Constructive mileage, 64. 
 Contract and Finance Company, 39. 
 Contracts for building Union Pacific pro- 
 posed but not executed, 24-29. 
 Cost of building Union Pacific first 
 
 sections heavy, 18; increased by what, 
 
 34; total, 36. 
 Cost of railway building in various states, 
 
 17- 
 Cost of wagon transportation of freight, 
 
 71- 
 
 Coudert, Frederick R., receiver, 98. 
 
 Crane, H. C, Hoxie's attorney, director, 
 etc., 19. 
 
 Credit Mobilier Investigation, 19. 
 
 Credit Mobilier of America, first con- 
 nection with Union Pacific, 21 ; rail- 
 way bureau, 22 ; objects in securing, 
 22 ; executive committee, 22 ; capital, 
 
 22, 23 ; nature of charter, 23 ; capital 
 stock increased, 27 ; value of stock, 32 ; 
 first attack on, in Congress, 73 ; in 
 campaign of 1872, 76; claims against 
 Union Pacific and end of its history, 80. 
 
 Cuts in Laramie Plans, 34. 
 
 Crocker, Charles, 38. 
 
 Davis, James W., contract and its assign- 
 ment, 32. 
 
 Davis, Jefferson, favorable to Pacific rail- 
 way project, 8. 
 
 Davis, John P., author of the Union 
 Pacific Railway, 1 1 . 
 
 Delaware Indian Lands, 39. 
 
 Denver and Rio Grande, 61. 
 
 Denver Extension, 42. 
 
 Denver Pacific Railroad Co., chartered, 
 41 ; history of, 45-6. 
 
 Dexter, F. Gordon, holdings of Union 
 Pacific and Kansas Pacific stock in 
 1880, 60. 
 
 Dey, Peter A., 70. 
 
 Difficulty of settlement between Govern- 
 ment and Pacific railways, 94. 
 
 Dillon, Sidney, became stockholder of 
 Union Pacific, 23 ; one of the seven 
 trustees, 31 ; holdings in Union Pacific 
 and Kansas Pacific stock in 1880, 60; 
 proposal for payment of Union Pacific 
 debt to Government, 95. 
 
 Directors of Union Pacific, first board of, 
 18. 
 
 Dix, General John A., of New York, first 
 President of Union Pacific, 18. 
 
 Doane, J. W., receiver of Union Pacific, 
 98. 
 
 Dodge, General G. M., and finding of 
 Evans Pass, 29 ; proposal for payment 
 of Union Pacific debt to Government, 
 
 94- 
 
 Douglas, Stephen A., favorable to Pacific 
 railway project, 8. 
 
 Duff, John, Union Pacific stockholder, 23 ; 
 attempts to let contracts, 30. 
 
 Durant, Thomas C, of New York, takes 
 hold of Union Pacific project, 17; re- 
 sponsible for three - fourths of first 
 
INDEX. 
 
 127 
 
 §2,000,000 o£ stock-subscriptions, 19; 
 prevents contract-letting by injunctions, 
 26, 28 ; one of seven trustees, 31. 
 
 "Eminent citizens," commission of, 73; 
 
 expenditures demanded by, 74. 
 Evans Pass, manner of finding, 29. 
 Evans, John, and Denver Pacific, 45. 
 Exhaustive contracts, 21. 
 Expenditures of Union Pacific, study of, 
 
 92-3. 
 
 Factions, Ames and Durant, 24. 
 
 Feeders, policy of building, 62-4 ; 'expend- 
 itures on, 66-7. 
 
 Fessenden, Senator, of Maine, 50. 
 
 First appropriation for Pacific railway, 8. 
 
 First definite plan for a Pacific railway, 3. 
 
 First president of Union Pacific Railroad 
 Co., 18. 
 
 First public meeting to advocate a Pacific 
 railway, 2. 
 
 First railway to Omaha, 13. 
 
 Fisk, James, 55. 
 
 Freight earnings, tonnage, rates, on Union 
 Pacific Railway Co., 1880-94, 9°; on 
 Union Pacific Railway System, 1880- 
 93. 90. 
 
 Fremont, John C, and his travels, 2 ; pur- 
 chase of Leavenworth, Pawnee and 
 Western, 40. 
 
 Funded debt, 93. 
 
 Garrison, Commodore, negotiations with, 
 concerning purchase of Central Branch, 
 51 ; sells Missouri Pacific road to 
 Gould, 58. 
 
 Gessner contract, see Boomer contract, 
 24. 
 
 Gould, Jay, and Kansas Pacific, 46 ; and 
 Central Branch, 51-2; buys Union 
 Pacific stock, 55 ; sells it, 56 ; his pro- 
 posed road from St. Louis to Ogden, 59 ; 
 his holdings of Union Pacific and Kan- 
 sas Pacific stock in 1880, 60; second 
 regime, 67 ; and Credit Mobilier claims 
 against Union Pacific, 80 ; offers to pay 
 Union Pacific debt to Government, 94, 
 96. 
 
 Hallett, Samuel, purchase of Leavenworth, 
 Pawnee and Western, 40. 
 
 Ham, Benjamin F., Assistant Secretary 
 and Treasurer of Credit Mobilier, 36. 
 
 Hannibal and St. Joseph Railroad, 48. 
 
 Haste in building Union Pacific, reasons 
 for, increase of cost due to, 33. 
 
 Hoar bill, 96. 
 
 Hopkins, Mark, 38. 
 
 Horn silver mines, 61. 
 
 Hoxie, H. M., contract, proposed exten- 
 sion, 19; assignment, 20 ; extension, 25. 
 
 Huntington, CoUis P., 38 ; offers to pay 
 Central Pacific debt to Government, 96. 
 
 Income of Union Pacific Railroad Co., 
 1870-9, 85 ; Union Pacific Railway Co., 
 1880-94, 87, 89 ; Union Pacific Railway 
 System, 1880-93, 88, 89. 
 
 Indians, workmen killed by, 34. 
 
 Injunctions, Durant's, to prevent making 
 contracts, 26, 28. 
 
 Interest paid by Union Pacific, 27, 28, 34. 
 
 Interest on subsidy bonds, due when, 74. 
 
 Joining of Union Pacific and Central Pa- 
 cific, 33. 
 
 Judiciary Committee of House and Poland 
 Committee report, 79. 
 
 Kansas branch, see Kansas Pacific. 
 
 Kansas City branch, see Kansas Pacific. 
 
 Kansas Pacific, history of, 38-48 ; plan 
 for competing road instead of branch of 
 Union Pacific, 41 ; cost of, 42 ; quarrels 
 with Union Pacific, 46 ; pool agreement, 
 47 ; consolidated mortgage, 47 ; land 
 grant, 91. 
 
 Lambard, Charles A., of Boston, 18, 20. 
 
 Land grant, of Union Pacific and of Kan- 
 sas Pacific, 91. 
 
 Land subsidy, 33,000,000 acres, 14. 
 
 Leavenworth branch, 14. 
 
 Leavenworth, Pawnee and Western, 14 ; 
 charter, 39. 
 
 Lewis and Clarke expedition, 2. 
 
 Lincoln, President, signs Pacific Railway 
 Act of 1862, 12. 
 
128 
 
 INDEX. 
 
 McComb, H. S., i8, 20; one of the seven 
 
 trustees, 31. 
 Machine shops, 34. 
 Map of proposed Pacific railways, 14. 
 Map of Pacific railways, as built, 53. 
 Materials and cars of Union Pacific sold, 
 
 18. 
 Memorials to Congress, Whitney's, 3. 
 Mink, Oliver W., 98. 
 Missouri Pacific, 58. 
 
 Mortgage on roads, first, 15; second, 16. 
 Motives for building Pacific railway, I. 
 
 Net earnings. Union Pacific Railroad Co., 
 1870-9, 85 ; Union Pacific Railway Co., 
 1880-94,87; Union Pacific Railway 
 System, 1880-93, 88. 
 
 Northern Pacific, 9, 61. 
 
 Offer to pay debt to Government, Gould's, 
 94 ; Dillon's, 95 ; Huntington's, 96 ; 
 Adam's, 96. 
 
 Officers of Union Pacific, first, 18. 
 
 Olney's plans for settlement of the debt, 
 
 97- 
 
 Omaha's first railway connection with the 
 East, 13. 
 
 Operating expenses. Union Pacific Rail- 
 road Co., 1870-9, 85 ; Union Pacific 
 Railway Co., 1880-94, 87 ; Union 
 Pacific Railway System, 1880-93, 88. 
 
 Oregon Railway and Navigation Co., 66. 
 
 Oregon Short Line, 66. 
 
 Organization of Central Pacific Railroad 
 Co.. 17. 
 
 Organization of Union Pacific Railroad 
 Co., 15. 
 
 Osborn, William, contract, 49. 
 
 Pacific Railway Act of 1862, passage, 12 ; 
 object, 13; terms, 13-15; amendments, 
 
 15- 
 Pacific Railway Act of 1864, l6, 19. 
 Pacific railway and the Indian problem, 
 
 saving on Government expenses, a war 
 
 measure, 71. 
 Pacific railway bills, early, 9-12. 
 Pacific Railway Commission of 1887, 84. 
 
 Pacific railway, expectations of profits 
 
 from, 69 ; opposite view, 69. 
 Pacific railway in party platforms, ID. 
 Pacific railway subsidy, 14. 
 Pacific Railway, map of, as proposed, 14; 
 
 as built, 53. 
 Palmer, President of Chicago, Rock 
 
 Island and Pacific, 51. 
 Party platforms and the Pacific railway, 
 
 10. 
 Passenger earnings, numbers, rates, on 
 
 Union Pacific Railway Co., 1 880-94, 
 
 90 ; Union Pacific Railway System, 
 
 1880-93, 90- 
 Pennsylvania Fiscal Agency, objects, 
 
 charter, bought by Durant, name 
 
 changed to Credit Mobilier, 21. 
 Perry, John D., and Co., 42. 
 Plans for settlement with Government, 
 
 Thurman's, 82-3 ; Hoar's, 96 ; Olney's, 
 
 97- 
 
 Platforms of parties and Pacific railway, 
 10. 
 
 Plumbe, John, 2. 
 
 Poland, Luke, chairman of House Com- 
 mittee, 19, 76; committee report and 
 Judiciary Committee of House, 79. 
 
 Pomeroy, S. C, of Atchison, Kansas, 18. 
 
 Poor, H. v., of New York, first secretary 
 of Union Pacific Railroad Co., 18. 
 
 Pottawatamie Indian lands, 39. 
 
 Profit on construction of Union Pacific, 
 cash, 36 ; cash and stock, 37. 
 
 Proposed routes for Pacific railways, 9-10. 
 
 Prorate, 64. 
 
 Rate prorate, 65. 
 
 Receipts from sale of securities, 36. 
 
 Receivers, names, 98. 
 
 Receivership of Union Pacific, 67. 
 
 Reorganization Committee of stock- 
 holders, 98. 
 
 Republican Valley Railroad, 51. 
 
 Resolution for appointing board of " emi- 
 nent citizens," 73. 
 
 Sage, Russell, holdings of Union Pacific 
 and Kansas Pacific stock in 1880, 60. 
 
 St. Joseph, initial point of branch, 14. 
 
INDEX. 
 
 129 
 
 Scranton, Joseph H., of Scranton, Pa., 
 18. 
 
 Settlement with Government, why diffi- 
 cult, 94. 
 
 Shoemaker, R. M. and Co., 42. 
 
 Shoemaker, Miller and Co., 42. 
 
 Sioux City Branch, see Sioux City and 
 Pacific. 
 
 Sioux City and Pacific, 13, 38. 
 
 Southern Pacific, 9, 39, 61. 
 
 Stanford, Leland, 38. 
 
 Stock subscription to Union Pacific, 17, 
 18. 
 
 Subsidy of Pacific railway, 14. 
 
 Surveys of routes for Pacific railway, 8. 
 
 Terms of Pacific railway bills, 10-12. 
 
 Thompson, J. Edgar, of Philadelphia, 18. 
 
 Thurman Act, provisions, 80-2 ; legality, 
 82-3 ; workings, 83 ; a type of Govern- 
 ment's proposals for settling the debts, 
 96. 
 
 Transportation of materials for Pacific 
 railways, 17. 
 
 Trent affair, 72. 
 
 Tripartite agreement, 31. 
 
 Trustees, the seven, 31. 
 
 Union Pacific Eastern Division, see 
 Kansas Pacific. 
 
 Union Pacific Railway, by John P. Davis, 
 II. 
 
 Union Pacific Railroad Co., organization, 
 15; subscriptions to stock, 17, 18; 
 ground broken for, 18 ; sells cars and 
 materials to raise funds, 18; stock 
 value, 36 ; quarrels with Kansas Pacific, 
 46 ; receivership, 67 ; profits expected 
 from building, and opposite view, 69 ; 
 coal business, 91 ; land grant, 91. 
 
 Value of Union Pacific stock, 36. 
 Villard, Henry, 66. 
 
 Waterville and Washington Railroad, 51. 
 
 Wendell, Cornelius, bribe paid to, 34. 
 
 Whitney, Asa, 2 ; memorials to Congress, 
 3 ; states approving plan of, 6 ; com- 
 mittees of Congress approving plan of, 
 7; arguments for plan — Whitney's, 
 3-6 ; committee's, 7 ; bills to carry out, 
 
 3, 7-8- 
 
 Williams, John M. S., contracts, 28. 
 
 Wilson, J. M., Chairman of House com- 
 mittee, 17, 77.